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Real Estate Investing
Real estate provides investors with diversification. Real estate and real estate products often serves as an inflation hedge. On the eve of financial crises investors consider moving capitals to tangible assets, like gold as well as real estate. Real estate investments are not only a source of diversification but also provide good returns. When during 2008 stock market crisis the S&P 500 index lost 9%, real estate stocks gained 34% on average.
Investors can invest in real estate in a few ways:
Direct investment
Owing a home or property is a way to save capital from inflation. But this approach have the risks of decline of value due to market conditions, thus investors are often have to wait for the prices to go up or wait for a lucky chance to sell to the right customer. Cost of ownership is the second issue which has to be carefully considered.
Purchase of REIT ETF
Buying real estate investment trusts (REIT) is another way to get access to real estate market.
REITs receives income from owning and renting real estate. Moreover, REITS are highly regulated. REITs are required to pay dividends in the amount of 90% of all profits to shareholders.
REITs have the following benefits:
High Yields.
Liquidity of REIT Shares.
Capital Gains.
Simple Tax Treatment.
Before investing in REITs investors should look at funds liquidity and daily trading volume.
