A REIT is an acronym for Real Estate Investment Trust – a company that owns income-producing properties. These are a form of known as “pass through” investment vehicles, meaning the profits are “passed through” to the shareholders. In order to qualify as a REIT, a company has to have most of its assets tied to real estate and it must annually distribute at least 90 percent of its taxable income to shareholders through dividends. In return, the company is exempt from paying corporate income tax.
So what’s the benefit to investing in a REIT? By purchasing or trading shares in a REIT, investors are essentially buying stock in a company that is in the income-producing real estate business. The investor doesn’t have to concern him or herself with the hassles of being a landlord, but still stands to gain money through the REIT’s investment properties.
As with any type of investment, REIT stocks should be carefully analyzed. If you’re not familiar with stocks and trading, consult a professional – or invest the old-fashioned way by investing in rental or vacation property. Not sure which is right for you? Ask yourself a few questions:
Would I be able to handle the responsibilities of being a landlord?
Can I afford to hire a professional property management company?
Am I at all familiar with the stock market?
Do I have enough money in savings to cushion a financial loss?
After answering these questions honestly, you should have a fairly clear idea of whether investing in a REIT is right for you.
What are Some of the Top Rated REITs?
I have personally owned REITs as part of my personal portfolio for many years with moderate success. Overall during the past five years I likely came out ahead of where I would be if I had my money tied up in rental properties due to declining market values.
TheStreet.com put out a list of their top rates diversified REITs stocks which included the following equities:
Symbol – Equity Name – TheStreet Rating:
ROIC – RETAIL OPPORTUNITY INVTS CP – B
PSB – PS BUSINESS PARKS – B
VNO – VORNADO REALTY TRUST – B-
LRY – LIBERTY PROPERTY TRUST – B-
OLP – ONE LIBERTY PROPERTIES INC – C+
GOOD – GLADSTONE COMMERCIAL CORP – C
WRE – WASHINGTON REIT – C
FUR – WINTHROP REALTY TRUST – C
CLP – COLONIAL PROPERTIES TRUST – C
ROICU – RETAIL OPPORTUNITY INVTS – C-
Be sure to consult with a licensed financial professional before making any type of financial decisions and stocks can and do lose money.