Passive Income Vol. 1: REITs
If unclogging toilets at 2am at your rental property is not your idea of passive income, then you may want to consider a Real Estate Investment Trust.
How do they work?
REITs collects rents on the properties they own, then pass that income on as dividends to their shareholders.
Think of REITs like a large fund that owns different kinds of properties. You invest your money in a big pool with a bunch of other people, then experts who run the fund buy and manage the properties for you.
Some advantages of REITs:
1) Can provide passive income via high dividends, ~7-8%
2) Liquid & you can buy them in your personal trading account
3) Diversification across different kinds of real estate (apartments, offices, self-storage, etc)
Some disadvantages of REITs:
1) Stock prices will not go up as much as others since they are focused on generating income
2) REIT dividends are taxed as regular income
3) High fees for some REIT funds
Are REITs a good fit for your investment portfolio?? Book a meeting here for some ideas on potential REIT investments.
