Real Estate Investment Trust (Funds)
In general, I don't like to get too far into the weeds when it comes it investing. And you all know what I think about investing in individual stocks vs. mutual funds. But - with the rising prices in real estate, I think it's a good time to share the idea of real estate investment trusts or REITs.
First, a definition: A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. Think about your local mall or the largest apartment complex that you know - it's probably owned by a company. And that company owns malls, or apartment complexes or property all over your city - maybe all over the country. Well - you can invest in the the company that owns the property. And when real estate prices go up, when rent prices go up, when real estate is hot (like right now), then the value of that company goes up too.
Now - why am I telling you this? Because for most of us, it's not "easy" to get into real estate.
You've got to have reasonable credit in order to get a loan, you've got to have some kind of cash (either a down payment or earnest/ due diligence money), you've got to know something about the area that you're buying in and it doesn't hurt to to be handy with repairs. Purchasing or managing real estate requires a little more effort than investing in the stock market. Well, buying an REIT makes it a bit easier to "own" real estate. REITs are publicly traded (i.e., you can buy stocks that represent the company) and "voila", you now own a (really, really, really tiny) piece of real estate.
Like most publicly traded stocks, REITs can be purchased within mutual funds. So - rather than purchasing the stock of just one REIT, you could purchase the stock of multiple companies that are invested in real estate. And y'all know I love a good mutual fund. I don't give investment advice, but if you're interested in real estate investing, without the actual real estate, an REIT or REIT fund might be the way to go!
P.S. - REITs can be purchased through your regular brokerage account and your IRA account, it's super easy!
P.S.S. - Seriously, I don't give investment advice. I didn't mention the tax implications of REITs or the impact of rising interest rates on this investment type. So - go do some research on it and decide whether it's right for your personal situation. Y'all don't be out here telling people I told you to buy fake property...