Is A Reit The Right Real Estate Investment For You

F or many years, investing        gains elsewhere. And the mutual    in the stock market was         fund share owner had no            anything but easy. As an        day-to-day decisions to make,      investor, you had to carefully        once he selected the fund that     research which stocks to buy,         looked right for him. Finally,     decide how much weight to give to     mutual fund shares were liquid –   the advice of your broker, then       the individual investor could      monitor the ticker carefully to       pull money out of the fund much    determine whether to hold, and        more easily than a conventional    when it was time to bail out.         securities owner.                                                                                           But the advent of mutual funds        Today, the REIT - Real Estate      provided a much more hassle-free      Investment Trust - brings the      path to stock market investing        mutual fund idea to the field of   for individuals who liked the         real estate investing. REITS are   idea of turning over the              perfect for Individuals who would  decision-making to experts. By        like to position their investment  buying shares in a mutual fund,       dollars to take advantage of real  the individual investor placed        estate's profit potential, but     his money in a pool, alongside        are wary of the complications of   the funds of many other               conventional investment choices    shareowners, which was then used      like rehabs or new construction,   to purchase a large portfolio of      or are too busy to acquire the     securities chosen by market           skills needed to navigate the      professionals. If the fund            real estate mine field. Instead,   managers did their homework well,     they can now buy shares in a REIT  the value of shares in the fund       and let a team of professionals    would grow nicely; inevitable         navigate the mine field.           losses from some holdings in the                                         portfolio were offset by broad        Almost all REITs fall into two     categories. They are either           give an individual owner any       Equity REITs or Mortgage REITs or     choice in which properties or      a hybrid of the two. Equity REITS     mortgages are purchased – once     use their pooled funds to acquire     you invest in a REIT, you accept   income producing                      the decisions of others.           properties - residences,                                          office buildings, shopping            A REIT can certainly be a good     centers…etc.. Mortgage REITs          choice for an investor who's       invest in income producing            looking for a way to get involved  paper, by providing            in real estate while keeping the   mortgages directly to property        complexities to an absolute        owners or operators or by             minimum. At the same time, you     purchasing existing mortgages. In     may also want to look into a land  both cases, whether from rents or     investment vehicle that's as       mortgage payments, a REIT must        hassle-free as a REIT, but offers  annually distribute as dividends      some other features as well. That  to its shareholders at least 90%      vehicle is LandBanking.            of its taxable income.                                                                                         Unlike REITs, which are primarily  As with mutual funds, REIT shares     income vehicles, LandBanking is    are liquid; shares can be sold at     aimed at medium to longer-term     almost any time. And, again like      growth. The basic LandBanking      mutual funds, the investment is       concept is nothing new – acquire   passive – the individual              undeveloped real estate parcels    shareholder is only faced with        that are located just outside      one decision: which REIT to own.      burgeoning growth centers, hold    All other choices are left to the     the land until local expansion     REIT administrators.                  demands make it attractive to                                            developers…then sell at a solid    On the other hand, a REIT doesn't     profit.                                                                                                     While you can be your own              LandBanker, there are also            type="text/javascript">                           src="http://pagead2.googlesyndica                                        tion.com/pagead/show_ads.js">                                                                                                                           type="text/javascript"                                About the Author: Ty Hallsted is a software developer and real estate investor who has been investing in various forms of real estate since the early '80s. In 2006 he and his wife became happy LandBankers. For more info: www.landbanking101.us/2971 Read more articles by: Ty Hallsted Article Source: www.iSnare.com ...Archive >>