“Don’t place all your eggs in one basket” If you’ve had some experience in the stock market, you’ll no doubt have heard of this before. It’s a fundamental risk management strategy where you mix a wide variety of investments within a portfolio. The idea is that by doing so, you smooth out unsystematic risk so
Read More- you're not interested in being a landlord
- you're not interested in managing and maintaining properties
- you want to be able to easily diversify across various different properties (and potentially different types of property as well)
Advantages of Real Estate Investment Trusts (REITs)
In addition to providing diversification away from stocks, REITs offer several other benefits. For example:- They tend to be less volatile than the stock market and provide a steady stream of income through more consistent (and generally higher) dividends
- They offer the potential for capital appreciation as the underlying properties increase in value
- They can provide your exposure to a broad range of real estate asset classes (including niche sectors such as senior housing, storage facilities, or self-storage units)
- Most REITs will also have their own internal leverage to purchase their properties, so you won't need to incur mortgages yourself to get your real estate exposure, saving you a lot of potential mortgage stress.
Simplified Due Diligence - Multiple Properties Within a Stock
Another carried advantage of investing in REITs is the ability to research them like you would for any other stock. What this means is instead of having to think about things such as:- Capital growth
- Rental demand
- Location
- Age of the property
- Property features and renovations
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