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Commercial Investment – What Is An REIT?

 

The commercial real estate market is one of the best commercial investment opportunities anywhere. Yet actually getting involved in commercial real estate investments can be challenging, and require a great deal of learning in the process. REIT's, or Real Estate Investment Trusts, are commercial investment opportunities that many people may not be aware of, but they present a great chance for investors to experience commercial investment more conveniently. For many, investing in an REIT can be lucrative, without the necessary involvement or experience that individual investments require.

What Is An REIT?

A REIT is basically a commercial real estate investment that is owned and managed by a company that specializes in the development of income producing properties. Unlike other types of commercial investors who may develop or purchase investments to later sell at a profit, REIT's exist to continue generating income for those invested in the company. REIT owners are usually commercial real estate companies and other investment firms dedicated to this type of investment. Investment properties range from apartment buildings and complexes, to office buildings and other types of commercial properties that generate regular income.

Who Can Invest In An REIT?

Generally speaking, anyone with the desire to invest in commercial real estate can invest in a REIT. Since the property - or sometimes numerous properties - are managed by the development company, it is possible for many people to put their money into these investments and obtain a portion of the income generated by them. This makes REIT's great commercial investment opportunities for those who want some involvement with commercial real estate, but do not have the experience, time, or desire to do it on their own. While any kind of commercial investment requires those investing in them to have a certain amount of understanding in what they are doing, REIT's are convenient and safe, as they are professionally managed by the main development company.

Why REIT's Can Be A Good Investment

Other than the reason stated above, there are many other ways that REIT's make sense as commercial real estate investments. By law, REIT's are required to disperse 90 percent of their earnings to shareholders, making them one of the highest return investments available. REIT's are also very stable investments, since they generate income from rent paid, the same as if someone were to purchase a building outright and collect rent from it. Over the long term, these investments tend to produce a higher yield, just like any individual investment. Another huge advantage is that REIT's usually receive the best management and meticulous financial recordkeeping by many experienced people, which reduces the chance of loss due to mismanagement. Also, investments can be made directly, or through mutual funds, which makes liquidating them somewhat easier, as well. Many REIT shares can also be traded on the open stock market.

While no investment is ever totally risk-free, REIT's are generally very stable and profitable commercial real estate investments. Since REIT's offer many benefits over traditional investing, those interested in commercial investment opportunities should discuss this with a qualified commercial properties firm before making an investment!

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