Investing in commercial real estate properties can lead to good and steady revenue. Now that the economy is beginning to stabilize, the demand for Dallas commercial office space is expected to increase. The only problem is that investing in commercial properties requires a large investment and managing them also requires constant attention. The solution to this problem is a Real Estate Investment Trust or R.E.I.T.
An R.E.I.T. is a company that owns several income-generating real estate properties ranging from residential properties, such as apartments, to commercial real estate properties, such as commercial office and industrial buildings.
There are several standards that a company must meet to be classified as an R.E.I.T.
- First it must have at least 100 shareholders and should pay 90 percent of its taxable income to each of its shareholders.
- Second it must invest three-quarters of the company’s assets in real estate business.
- Third it must derive three-quarters of its income from rental and mortgage interest from properties in its portfolio.
When purchasing a real estate property through an R.E.I.T company, one is essentially buying shares and becoming shareholder of the R.E.I.T. This allows for money to be put directly into the real estate business without a huge amount of initial capital, unlike completely purchasing commercial property using one’s own finances, resulting in decades of mortgage payments.
Because an R.E.I.T. company is running the business, the investor usually does not have to do anything to increase revenue. An accredited R.E.I.T company manages the investments, looks for properties to purchase, finds tenants, and maintains the properties.
This particular type of company is generally considered a secure investment. Due to the fact that the company manages many properties such as Dallas commercial office space, the return of investment is stable. The long term returns offered by R.E.I.T.’s are also considerably better. Since there are a wide number of shareholders, R.E.I.T. companies have a high degree of transparency in both taxes and operation.
Investing in real estate properties through an R.E.I.T. company is fairly easy. All that needs to be done is seek a financial adviser or look at the stock market to find R.E.I.T.’s in which to invest. Currently, there are approximately 180 R.E.I.T. companies available for investment. As long as one has the finances to invest, becoming an R.E.I.T. shareholder is relatively simple.
Things to Consider
When choosing an R.E.I.T. company, avoid ones that only focus on one particular sector of real estate, as any significant change in that sector could damage a shareholder’s investment. It is also important to consider the location where the R.E.I.T. is focusing their investment. Low leasing demands with a high construction rate is a scenario that could result in low shareholder income.
Investing in real estate business such as Dallas commercial office space and earning an ongoing stream of revenue does not have to be difficult or expensive. Investing through an R.E.I.T. can provide the freedom to venture into real estate investment without being forced to learn extensively about this market. It has the potential to be a wise investment that could yield many benefits!