Friday, May 22, 2009

What To Know Before You Invest In REITs

If you are considering putting your money into the real estate investing market, you may be looking at purchasing into REITs instead of purchasing real estate outright.

There has been a lot of talk about REITs in recent years. They are great investments that many get involved in as a way to have their small piece of the real estate pie, while not having to purchase property and deal with all of the hassle that goes with that route. But what do you really know about REITs?

Before you invest, you owe it to yourself to know as much as you can about the investment you are going to put your money into. After all, we are talking about taking your hard earned money and putting it on the line. Don’t you want to know what the chances are you will see that money grow rather than go away?

Before you begin your investment into REITs you need to get to know the history of a REIT. Take that REIT name and look it up. There are plenty of places to do this, but if you want to save yourself a little time, try using the same place you will be buying and watching your portfolio. In the world of REITs the place for this is is the first and only online brokerage that specializes in REITs and real estate mutual funds.

Look up the history of the REIT once you are online. You also want to see if you can find a prospectus from the REIT. If you can find a prospectus you will see what the REIT has done over the past year. If you are trying to figure out what the future holds, you have to take a look at the past.

In the case of REITs and real estate mutual funds this annual report or prospectus will let you know just what has happened to the portfolio over the past year. It will give you a look at the percentage of gain or loss that it has seen and show you what the strengths and weaknesses of the portfolio are.

From here you need to take that information and compare it to the rest of the market. After all, over the past year a lot of investments have lost ground because of the economy. But that does not mean they are bad investments. So if you have found a REIT that has only made 1-2 percent in the past year, that may be a great thing if all the others have lost 2, 4, or more percent over the same time period.

A final thing you may want to look at when considering which REIT to invest in is who is in charge of the investment. All REITs have people who manage them. Some financial managers are better than others. So look up who is in charge, and their track record to get an idea of how well they will be taking care of your investing dollars.

This article was written by Earl E. Bird, spokes person for the, a site dedicated to educating Real Estate Investors on how to invest in Real Estate Mutual Funds to diversify their investing portfolio. Learn more at

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