When done the right way, REITs can make you more money than you ever thought possible. Nonetheless, there’s always a dark side to any story. If you are interested in start making money by becoming part of a real estate investment trust, here are some pros and cons you should consider beforehand.
Real estate investment trusts are highly profitable. Among the pros of investing in a REIT you may find these.
Investing in real estate is a great source of passive income, as it depends on rent, mortgages, and other maintenance-related fees you may have agreed on at the beginning.
Real estate investment trust shares are easy to buy and sell over and over again. This means that you won’t have a problem once you decide to sell your share and get your investment back.
Fair Distribution of Revenue
Earning money from a REIT is a sure thing, as REITs must split up to 90% of the annual dividends among shareholders.
Low Initial Investment
It is not necessary to have lots of money to start investing in a real estate investment trust. Moreover, owning a small fraction of a building grants you more points to increase your credit score.
Although the pros of investing in a real estate investment trust surely outshine the cons, these are some of the drawbacks you’ll face while investing your money.
According to real estate regulatory laws, every REIT must split 90% of the revenues among every shareholder included in the plan. The remaining 10% is not enough capital to reinvest on maintenance, remodelling, and other improvements.
High Transaction and Management Fees
Investing in a real estate investment trust requires more money than the actual amount used to buy the shares. It also includes management fees for brokers and REIT advisors. Don’t forget about the transaction fees you’ll have to pay every time you choose to reinvest your dividends.
Property Value Decrement
Investing in real estate is like investing in the stock market, as stock values can abruptly go up or down in a matter of seconds. Property value decrement is possible, making you lose a lot of money. However, the current economic situation states the opposite.
Now that you know about the pros and cons REITs have, it’s time for you to make the final call. Here in Whiterock REIT we highly recommend you try it, as the earning possibility is surely worth the cons you may face. Hire a broker beforehand and start making money now.