REITs, A Way to Invest in Real Estate Without Holding Properties: Part 3

This is our third and final installment of the series on REITs. If you’re interested in learning more, please reach out to us!

A Few Things to Watch Out For

Not all REITs make a good addition to your portfolio due to poor performances.

These are the most common issues with these funds:

• Unprofitable locations of the properties. Some REITs don’t perform well due to poor location of the properties the fund invested in.
• Bad management. Some bad management practices can result in loss of revenues. Ensure the fund you invest in includes properties that are actively managed, where renters are treated fairly.
• Past profitability. Check price and revenue history to get a better idea of how an REIT has been performing before you invest.

REITs are a great addition to your portfolio if you want exposure to real estate markets without owning and managing a property. These funds are very accessible to novice investors, but it’s important to select a fund that performs well.

When investing in REITs, a wise strategy is to build a diversified real estate portfolio, either by choosing a number of REITs that each specialize in one type of real estate, or by investing in larger funds that cover different markets.