REIT Dividends: Buying Rental Income For Less than $100 a Month! REIT Dividend Investing Pros and Cons 💰 REIT dividend Investing for beginners. Time Stamps so you can jump ahead to any spot in the video.:
0:00- Introduction to REITS
1:11 - When did REITs begin?
2:10 - Equity REITs vs Mortgage REITs
3:23 - Types of Properties REITs can hold
4:20 - How Equity REITs work and when dividends are paid
5:44 - REITs and Taxes
6:56 REIT Investing Pros and Cons
12:54 My experience with REITs and REIT income
14:15 Two REIT stock examples (I own these)
15:30 REIT Etf example
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There are several different types of real estate investment trusts (REITs) including equity REITs, mortgage REITs, and hybrid REITs. A REIT is a type of security in which the company owns and generally operates real estate or real estate related assets. REITS are similar to stocks and trade on major market exchanges. REITs allow companies to buy real estate or mortgages by using combined investments from its investors. This type of investment allows large and small investors to own a share of real estate.
Investing in REITs can serve as a source of cash flow for income-oriented investors. However, succeeding with REITs means finding the best REITs for income and understanding the advantages and disadvantages of this investment vehicle.
This 90% rule allows investors to collect a higher amount of income than other stocks that pay dividends. This pays off well for investors, as the average REIT dividend stands at 4.59%. Dividends average 1.85% for the S&P 500. Hence, even if one misses out on the top REITs, they still should earn a decent yield. Consequently, the government allows the REIT to deduct the money paid out in dividends from its corporate taxes.
REIT Pros
Perhaps the biggest advantage of buying REIT shares rather than rental properties is simplicity. REIT investing allows for sharing in value appreciation and rental income without being involved in the hassle of actually buying, managing and selling property. Diversification is another benefit. Building a diversified portfolio of one's own rental properties requires a hefty budget and a lot of time and expertise. Investing in the right REIT offers done-for-you diversification in one simple purchase. Furthermore, while rental properties are potentially lucrative investments, they can be highly illiquid, particularly when the real estate marketturns soft. REIT shares, on the other hand, can be redeemed for cash in one five-minute phone call.
REIT Cons
REITs lack the leverage advantage offered by financing rental properties. Because a REIT is required by law to distribute 90% of its profits to investors, that leaves only 10% to grow the company by investing in additional properties. Consequently, REIT share prices rarely grow as fast as, say, Silicon Valley tech companies, which rarely pay dividends and usually invest every penny of their profits into growth and innovation.
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