What would you rather invest in real estate or stocks? Most people I asked preferred to invest in real estate. Investing in real estate is nice, if you can afford it. We all hear about housing prices skyrocketing in San Francisco and thought, if I had just bought some real estate there 10 years ago!
Stock investing is easy to get into, Sirius XM stock cost about $6/share and you can buy one unit of General Electric for about $10.
Here are more advantages of investing in stocks:
The price of real estate can rise by tens of thousands of dollars in a very short period of time, that just doesn’t happen with stock.
So, should we invest in real estate or stocks? Both, in a way.
A Real Estate Investment Trusts (REITs), is a type of real estate company that resembles a stock. It allows small investors the opportunity to invest in real estate.
REITs invest in land, apartments, hotels, office space, retail space, industrial space, mortgages, and mortgage backed securities.
Most of us are unable to invest in a shopping mall or other large property on our own, but REITs provide a means to do just that. Imagine being able to invest in those huge properties.
REITs are unique and provide many advantages for the average investor. First, it’s important to understand real estate investment trusts.
1. Equity - These REITs invest predominantly in real estate properties and receive most of their revenue via collecting rent. Revenue is also generated by property sales. Approximately 90% of REITs fall into this category.
2. Mortgage - These REITs receive the majority of their revenue from investing in mortgages and related securities. The risk tends to be higher with mortgage REITs because of the unpredictability of interest rates.
3. Hybrid - These REITs are a combination of equity and mortgage REITs.
Many REITs are listed and traded on the major stock exchanges, just like stocks.
REITs share some key advantages with stocks:
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