REIT: The Next Big Thing In Real Estate

In real estate lingo, REIT means real-estate investment trust. It is composed of property-investment companies that pay dividends to stockholders with revenue derived from rent and other fees. REITs correspond negatively with the NASDAQ Composite Index and appear to do well when other stocks don’t. They suffered seriously during the late 1990s, but have made a successful comeback in the bear market that began 10 years ago.

In 1960, Congress launched REITs, offering small investors the chance to invest in profit-producing properties. Now, the REIT is popular in a lot of other countries aside from the United States including: Australia, Japan, and Brazil. REITs are not the sole real estate investment instruments available in these countries but all are dependent on the various laws in effect in each nation.

Due to the fact that REITs give the most direct means to purchasing property and avoiding costly hassles, they are very appealing to individual real estate investors. As long as they give out at least 90% of taxable income to investors annually, dividends from REITs are exempt from federal tax. Dividends can amass 8 to 9% per year and they offer predictability almost unheard of on today’s market.

Mutual funds have the same design as REIT’s and grant similar investment structure. They offer every shareholder a pro rata percentage of earnings. The stocks of many REITs are easily found on major stock exchanges. The subtraction of dividends from taxable corporate income is permitted with REITs. Capital gains and any taxes relating to dividends received must be reported by an individual investor.

In 2009, it was estimated that there were about 170 public REITs controlling in excess of $300 billion US dollars. The target of many of these trusts usually involves residential or commercial properties. There are some REITs that are concerned with handling the maintenance and management of the properties within their portfolios and there are also some who employ contractors to do these services.

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What To Look For When Investing In Rental Property

Money and time are very valuable. So when investing them into a rental property there are a few things you will want to consider. Understanding what you are getting into before you make any commitments is the key. Take your time and the the research necessary.

There are a lot of things to look into. Dig into the property history and find out if it has been successful, or why previous tenants chose to leave. Look into property management software, how tenants will pay rent, how you will fulfill maintenance requests, and how much of your time managing the property may take.

Rental property can be really cheap but often not be worth the money and time it would take to address the problems that may arise. Problems hidden from your view may come up later on and cost you a lot of time and money. Don’t get tricked into investing in properties like this.

Look into the neighborhood for more information. Find out if the neighborhood has a lot of crime. Talk with the local neighbors to see what their thoughts are on the property and what they have noticed about it in the past. High crime rate may keep prospects from choosing your rental property.

If you are looking at multifamily housing, finding a good property management software will also do a lot to help you manage your property. Again, do research. Find out which property management system will work best for you and has the tools you specifically need to manage your property. Allowing tenants to pay rent and submit maintenance requests online will save you the time and hassle.

Talk with the current property owner and see if you could speak with a resident of the property. Discuss their living situation and and ask them if they are happy and if all of their needs are met. If their needs are not met then dig a bit to find the underlying problem and see what could be done to meet it.

Do not rush into investing in a rental property! A lot of money and time could be lost if it does not work out. Property management takes a lot of work and time. It is not something you can set up in a few days and let run its course.

You may find out that property management is not for you. If it is, make sure and do as much research as you can.

Author Henry Drake can help you find the perfect property management systems. Landlord software will make managing your property simple. Free reprint avaialable from: What To Look For When Investing In Rental Property.