Why Invest in Real Estate Investment Trusts?
April 27, 2023
Have you avoided a real estate investment due to low liquidity and huge investment requirements? A REIT solves this problem for you. Real Estate Investment Trusts (REITs) have delivered impressive returns based on the steady, high dividend income while also offering long-term capital appreciation.
Let’s take a look at a few reasons why you should consider investing in real estate investment trusts.
A solid reason for investing in REITs is the obvious goal of generating additional income. We have seen REITs do very well in the past across various market conditions which make them an ideal investment vehicle to generate steady income.
Smart investors are aware of the benefits of a diversified portfolio and this is a big reason why you should invest in a REIT. It will not only diversify the assets but will also diversify the way you invest in those assets, which will reduce risk and give more stability to your profile.
If you compare REITs with other investment models, assets or securities, you will find that REITs have the ability to generate higher yields since they are required to pay at least 90% of the taxable income to investors as a distribution.
REITs have been known as one of the better-performing sectors even in an inflation. When REITs have commercial holdings, there are chances of rents to rise as inflation rises and it can provide a hedge against the rising inflation rates.
A solid reason to consider REIT investment is the special tax considerations for those that offer investors with high dividend yields. Since REITs are constructed as a corporation, they are not taxed at the institutional level and it allows investors to avoid the double taxation dividend.
Investing into a Private REIT in 2023 could be a smart move as it protects your investment from the market turmoil while also offering steady, consistent income in the form of dividends.