Want to Start Your Real Estate Empire Small? Try These 3 REITs.
Lots of people want to invest in real estate. After all, owning investment properties can provide welcome income. But being a landlord can be tricky, as you'll have to deal with tenants, some of whom may not pay their rent on time or at all, and who might damage your property. You can't easily liquidate real estate, either, if you need some cash or just want to change direction.
Meanwhile, over long periods, real estate has not been nearly as effective a wealth builder as the overall stock market. While the stock market's long-term annual average return is close to 10%, real estate lags that significantly. According to the Home Price Index from the Federal Housing Finance Agency, monthly house prices averaged only 4.4% annual growth between 1991 and 2023.
So consider this real estate investing strategy instead: Opt for real estate investment trusts (REITs), which are companies that buy and lease out lots of properties, often focusing on particular niches such as apartments, industrial buildings, medical centers, retail outlets, storage facilities, and so on. They trade like regular stocks and are required to pay out at least 90% of their earnings as dividends, so they often sport attractive yields -- generating income. They're a fine alternative to owning actual investment properties.
Source Fool.com
