Understanding How to Invest in REITs

Brian l. katz

With over 25 years of real estate industry experience, Brian L. Katz serves clients with top notch advice and experience. Drawing from his degrees in Real Estate and Economics, Brian Katz helps investors understand how to invest in REITs that potentially cover a diverse portfolio of properties. Popular commercial real estate may include hotels, offices and restaurants, but it can also consist of plenty of small businesses and strip centers. Having a variety of tenants throughout can keep a steady cash stream flowing as they support each other with related shopping opportunities. Since the best commercial real estate deals may not be listed publically, you might want to consult with commercial real estate investment groups that can help you find the right opportunity for your situation.

Real estate investing companies are also good when you want to diversify your investments, yet still keep it in the real estate market. They allow investors to pool their money to purchase previously unaffordable properties that can generate cash flow if you know how to invest in REITs. By leveraging an investment portfolio model, the commercial real estate investment firms can provide additional liquidity in your investment. Technically you are purchasing shares of the portfolio, but not part of the property itself. For that reason, you can buy and sell more easily than if you were dealing with a specific piece of property.

To find real estate investing companies that can coach you in how to invest in REITs, you will have to do some preliminary research that evaluating holdings and returns. There are various third party websites and consumer forums that discuss the different investment options. You can use these to look at comments and reviews about particular investment options. You should also look at historical returns over a couple of different time frames, that are representative of typical performance. While they are not guaranteed, seeing growth can be indicative of potential future performance.

As you get further along the research process, you may want to look at funds from operations, that examines net income while adjusting for amortization and depreciation of the properties. This can also give you some insight into the funds operating costs and any administrative fees associated with it. Like publicly traded stocks, most real estate investment funds require governance and guidelines that protect all involved. While any kind of investment involves potential risk, real estate can represent one of the more proven, long term investments. You will have to determine what returns and risk you are comfortable with as you evaluate your options.

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