Sunday, May 17, 2009

Financial Freedom Through REITs and Real Estate Mutual Funds

What have you done to secure your financial freedom in the future? If you are in your 20s, 30s or even your 40s you may not yet have thought about the possible things you need to be doing to make sure you have the money you need set aside when it comes time for you to enjoy your golden years. But this is something you need to be thinking about and working on now.

In addition to thinking of your retirement years, if you start working on your plan for financial freedom now, you may be able to enjoy it and take advantage of it sooner as well. So, think of this as an investment in your ability to enjoy more of life down the road.

So, now you need plan. Perhaps you have started with a 401k, a Roth IRA or other investment account. Maybe you have some cash put aside in an interest-bearing savings account. All of these are a good start to making sure you have money available, but you can always do more.

The key to starting another investing option is to think about where would be a wise place to put your money. You want to make sure you will have something at the end of the day, even if there are bad market times ahead. To this end you will want to choose investments that will not disappear.

This past year in the market has shown us that there are a lot of investments around that could well disappear in just a bad day on the market. In this down economy, how many businesses have you heard of that have gone under and disappeared? Plenty of them. If your money were all put into stocks with those companies, you would have had nothing left at the end of the day.

Instead, you need an investment that will not lose all of its value. Real Estate Investment Trusts (REITs) and real estate mutual funds are this type of investment. Here's why.

When you purchase into REITs and real estate mutual funds, you will be not just purchasing one stock, but a number of stocks, bonds and other Wall Street offerings that are all lumped into one portfolio. This gives you a better chance that even if one of the stocks, bonds or mutual funds inside the portfolio have a bad day, the rest of the portfolio will negate that.

Additionally REITs and real estate mutual funds are based on real estate. While values may fluctuate, real estate will not lose 100% of it's value, as it is based on something tangible, not a business idea.

When you're ready to start investing in real estate you will want to work with a company like REITBuyer.com. REITBuyer.com is the first and only online brokerage that specializes in real estate investment trusts and real estate mutual funds. Not only can you buy, sell, and organize your portfolios online with REITBuyer.com, but you can also be kept up to date with the latest news, trends and reports that are specifically geared towards your investments.

This article was written by Earl E. Bird, spokes person for the REITbuyer.com, a site dedicated to educating Real Estate Investors on how to invest in Real Estate Mutual Funds to diversify their investing portfolio. Read a great collection of articles on REITs at http://corporationfinancial.blogspot.com

Saturday, March 21, 2009

REITs: Like "Communities Homes" - The Good and Bad of Real Estate Investment Trusts

Real Estate Investment Trusts, or REITs, are an avenue of investment that many people have heard of, but have not taken a good look into. Let's take that look now.

First, you need to understand what a REIT is. It is generally a property management investment. You fund a property management company and let them run a real estate asset, with you getting dividends from the profit. For example, a commercial real estate REIT may own a shopping center or strip mall. When you purchase shares of that REIT they are going into building and maintaining that structure. As tenants move in and rent those spaces, and the REIT profits, the profits come back to you in the form of dividends. This is also the case for residential real estate interests like housing developments, apartments and condominiums.

So now let's look at the good and bad sides of this investment option.

Dividends – Unlike other stocks and mutual funds, REITs come with some very strict rules for how their profits can be used. As profits come into a REIT, at least 90 percent of that profit must go right back to the shareholders in the form of dividends. That means most REITs always see a nice annual return on the initial investment, averaging 6% or more.

Their Own Entity – If you have noticed, the stock market has an all for one kind of approach to things. Often if one area of the market goes down, the rest follows, hitting you across the board. But REITs are their own creature. By not being as strongly tied to other investments and stock fluctuations, they can hold strong even when the rest of the market is on a roller coaster ride.

Solid Starting Platform – If you are not a major investor in general, REITs may be the way to go to begin your investment portfolio. For the most part they are strong and stable purchases and can bring in a good, steady profit for years to come.

Constant Investment – Since REITs revolve around property investments, there is always something tangible – a piece of land, homes, apartments or businesses. Usually these also have long-term leases, which means there will be money coming in from those leases to feed your dividends.

Bad

There aren't that many bad points to REITs, but here are a few:

Slow Growth - If you are looking for a major growth in your REIT, you likely won't see it. Since only 10% of the money made can be put back into the REIT (as 90% has to be paid out as a dividend) that means there is a lot less going back into the business to make it grow more quickly.

Down Times – Just like any other investment, there is always the chance that a downturn in real estate will make it where your REIT does not bring in a profit for the year.

Despite these few bad points, REITs are worth looking into. Start by going to a full service website like REITBuyer.com. There you can get information about REITS, tools and research help as well as education and advice before you buy. When you're ready, they are also investment real estate brokers who can take care of the entire transaction.

Wednesday, February 25, 2009

REITS for Diversity and Security instead of Directly Owning Communities or Home

Have you taken a look at your investment portfolio lately? If you have, and it's filled with the normal stock and bond investments, you may have noticed that there has been a lot of damage to those investments in the past year or so. With the credit crunch and the market crash, most investments are half, or less, of what they should be. Or do you directly own real estae properties like: "`ommunities homes" or apartments?

This is when you should consider what you should be doing to hedge those other investments. This is where REITs come in.

REITs are Real Estate Investment Trusts. These are funds where you fund a real estate management company. There are a variety of REITs out there. Some offer a way to back real estate developers who are taking on new ventures in construction. Others are meant to fund management of residential real estate such as apartment complexes, condominiums or even neighborhoods. Still others use the funds put into the REIT to operate commercial real estate interests.

I think Louis J. Glickman said it best when he said, "The best investment on earth is earth.” Real estate is always a wise investment. No matter what happens the land will always be there. Sure it may waiver in value from time to time, but in the long run, it will always be around, unlike businesses that can close their doors and take your investments down with them.

With this said, adding a REIT or two to your portfolio it would offer you a little more diversity and security in your investments.

You never know what the stock market will do. Just in the past few decades we have seen a number of sweeping changes in the market that completely broke some investors. Think of how many people you know who went bust during the Dot.com era.

Often the problem for them was they were too focused on the flavor of the month. They were putting everything they had into the new Dot.coms hoping to continue to ride the boom and make great profits. While they did see some great profits, those did not last forever. For those who kept putting everything they had into the dot.com market, they felt the agony of defeat in a major way when the market fell, many losing everything they had.

While there is nothing wrong with trying to jump in on an up and coming thing and make a great profit, it comes down to the old 'all your eggs in one basket' cliché. You don't want to have everything hedging on one investment. Instead have a diverse portfolio so if there is a drop in one area, you have other investments hedged against it.

In this case, even when there is a drop in the stock market and mutual funds, real estate usually will hold pretty strong through the down times, keeping you from feeling that all of your investments have been swept away.

When you're ready to take a step towards diversity, make sure to do it right. Going to a website like ReitBuyer.com will help you do just that. They will not only give you the research and information you need to buy wisely, but they are also real estate brokers for these investments and can help you seal the deal.