Ways to Invest in Real Estate
Beyond this, there are other ways to invest in real estate if you don’t want actually to deal with the properties yourself. Real estate investment trusts, or REITs, are particularly popular in the investment community. When you invest through a REIT, you are buying shares of a corporation that owns real estate properties and distributes practically all of its income as dividends. Of course, you have to deal with some tax complexity.
Eligible for the low tax
Your dividends aren’t eligible for the low tax rates you can get on common stocks. but, all in all, they can be a good addition to the right investor’s portfolio if purchased at the right valuation and with a sufficient margin of safety. You can even find a REIT to match your particular desired industry; e.g., if you want to own hotels, you can invest in hotel REITs.
Tax lien certificates
You can also get into more esoteric areas, such a tax lien certificates. Technically, lending money for real estate is also considered real estate investing, it can be considered this as a fixed income investment, just like a bond, because you generating your investment return by lending money in exchange for interest income. You have no underlying stake in the appreciation or profitability of a property beyond that interest income and the return of your principal.
Buying a piece of real estate
Likewise, buying a piece of real estate or a building and then leasing it back to a tenant, such as a restaurant, is more akin to fixed income investing rather than a true real estate investment. You are essentially financing a property, although this somewhat straddles the fence of the two because you will eventually get the property back and presumably the appreciation belongs to you.
