Are REIT's a Good Investment Strategy?
Over the past year, I've been studying the habits of the wealthy. From their morning routines, to business advice, their successes and failures, and investing history. One of the main wealth drivers is that they all have some type of real estate in their portfolio. For example, Jeff Bezos, the world’s richest man is the 28th largest landowner in the US.
Another case study example is McDonald's. If anyone has seen the McDonald’s movie called "The Founder" which stars Michael Keaton, you know the scene where Harry Sonneborn tells Ray Kroc that they are not in the burger business, they are in the real estate business. McDonald's would lease the land from the landowner and then sublease it to the franchise owners. Because of this model, McDonald's has become one of the largest land commercial real estate owners in the world with over 30 Billion in assets.
So, what are you supposed to do if you are interested in real estate and want it to become a part of your portfolio but don't want to manage properties yourself, or don't have enough capital to buy into big deals? One way is to invest in REIT's. According to The Motley Fool, "REIT stands for real estate investment trust. It's a type of company that lets investors pool their money to invest in a collection of properties or other real estate assets. Most REITs have a straightforward business model: The REIT leases space and collects rents on the properties, then distributes that income as dividends to shareholders. (Investopedia)
In this short video from Nareit1, it will explain the different types of REIT's, the benefits of them, and how to invest in them.
Would you rather invest in real estate and manage them on your own or invest in REIT's? Let me know in the comment section below!