Monday, March 23, 2009

Don't Believe Media Real Estate Hype

If you have been considering REIT investing, you may have found yourself debating whether this is the way to go with the current economic situation being what it is in the United States. It seems every time you turn around that there are any number of negative real estate articles in the newspaper on the TV and even on all of the Internet news sites. It may have you second-guessing your thoughts about investing.

Frankly, things are not always as bad as the media makes them sound. Part of the job of the media is making things sound more dramatic so you will listen to their coverage of the stories. And if you look back at many of the 'sure disasters' they have claimed, most were quite the overstatement. Take the Y2K bug for example. Many media reports were advising people to stock food, water and money since no computers were going to work after Y2K and therefore our whole society would collapse. It never happened. Sure, there were a few minor glitches, but most were fixed in no time and life continued on in the year 2000 with little more than a hiccup.

When you consider this, you should consider what else they are blowing out of proportion.

Many are blaming the media for being the cause behind much of the financial problems that the country is believed to be having, from the stock market to the real estate industry, not because the problems are that large, but because they are making them that large.

So, how do you know what's safe to invest in. Well for one, you never really know what is a safe investment. After all that is why there is risk to investing. But you can be more confident in real estate than many other options. The reason for this is that real estate is not going to completely disappear. Think about it. Even if the price fluctuates, a real estate investment fund will still hold substantial value, even in the worst of economic times. It's not like the land is just going to shrivel up and disappear. No, unlike companies that can close their doors and take all their shareholders funds down the tube with them, real estate will always have value, even in the worst of times.

If investing in real estate is new for you, you're not alone. There are plenty of people who are just making their way into the real estate market and need a little advice to make sure they are making the right trading decisions. This is where comes in to help. is a full service REIT broker that not only can help you manage your portfolio and online trading, but is also chock full of research and educational tools as well as charts, tables and programs that can help you learn about the REITs you are interested in and make sure you go into this in the right state of mind.

There always has to be a first time for everything. In this case, take a page from the book of Donald Trump, "Every day, you'll have opportunities to take chances and to work outside your safety net. Sure, it's a lot easier to stay in your comfort zone. In my case, business suits and real estate. But sometimes you have to take risks. When the risks pay off, that's when you reap the biggest rewards."
What are REITs (Real Estate Investment Trusts)?

If you pride yourself on being an up and coming investor, you should make sure you know all of the investing options that are available to you.

While most people know of trading things like stocks and bonds, they may not know of the deeper levels of those things, such as REITs. REITs are Real Estate Investment Trusts. Essentially this is a company that purchases properties and then becomes a real estate management firm.

How you get involved in these investments is by giving them the funds to make those purchases and run them. Essentially, they will allow a certain number of investors to be a part of the trust (it is usually a limited number for each trust).

So where did REITs come from? Well the REIT was born in 1960 by congress. Before this time only those with major money were able to get into real estate investing. Everyone else had to play the regular stock market. So, they wanted to give smaller investors the chance to get in on the profit making market of real estate. With REITs instead of having to have the money to be able to purchase a whole property at once, an investor can get in to the market with just a percentage of the money buy buying one or more shares.

When choosing a REIT, it is important to realize that there are a variety of REIT styles. Usually a REIT sticks with one type of property. For example, there are commercial REITs that only deal with commercial real estate and ventures. They may purchase office space and rent it out to businesses. Another way to go is industrial, purchasing and maintaining industrial parks. There are also residential buildings that vary from apartment buildings to condominiums and even complete housing neighborhoods that are owned and operated by the REIT. If you know more about one kind of real estate than another, you may prefer to fund this style of REIT where you can invest in something you know about.

Understanding how REIT investments work is vital if you are considering going into this type of investment market. Here are some of the basics.

First, if a REIT makes money, its investors are going to make money. The way a REIT works is that as it makes taxable income, at least 90 percent of that must be paid directly to it's investors. That means as a shareholder, if the REIT is making any money, so are you!

When it comes to shareholders REITs run the gamut from small to massive, but even the small ones are not so small that they can't have any buying power. A REIT must have at least 100 shareholders.

When it comes to operations, REITs have a few major rules to follow. First, they are required to invest 75% or more of the money put into the trust in real estate ventures. Additionally, they have to be getting at least 75% of their income from monies made from the properties they own (i.e. through mortgage interest or rent)

If you are considering investing in REITs it is important to note that they are also a little different in tax structure. Since so much of the profit from a REIT is going to the shareholders, they are able to deduct that money from their taxable income. However, when you as in investor get your dividends you will be responsible for paying the capital gains taxes.

Before you invest, learn more. is not only a full service REIT broker, but also has research and educational information to help you get started and build your portfolio.