REITs: What They Are and How To Invest in Them Properly

 January 26, 2022

By  Guy Gray

The stock market is both empowering and frustrating. On one hand, it allows individuals to invest money in a company where they wouldn’t be able to otherwise. On the other hand, they come with potentially extreme volatility and lots of risk. 

Real estate investment trusts (REITs) are very similar to stocks. In fact, you invest in REITs through the stock market (or similar exchanges). Let’s discuss what investing in commercial real estate with REITs looks like and how to do it right.

What Are REITs?

According to The Motley Fool, “Real estate investment trusts, or REITs, give everyday investors the ability to invest in commercial real estate assets through the stock market.” The two types of REITs are equity and mortgage:

  • Equity REITs: Companies that own properties; the main type of CRE REIT.
  • Mortgage REITs: Mortgage-related REITs usually paid through a third party. 

With REITs, you’re either buying portions of properties (equity REITs) or portions of mortgages (mortgage REITs). Both can be potentially sound investments, though the former is more common. 

REITs and Stocks

Think of REITs as real estate investment stocks, as that’s pretty much what they are. REITs act the same as other stocks and don’t have any special requirements to own, though they are often only available on certain exchanges. 

You can invest in specific individual types of properties with REITs, or you can invest in an REIT that mixes it up to allow you some diversification through a single REIT. Your best bet is to invest in a REIT in an area you know, as you’ll have expert knowledge on investment decisions. As with stocks, you don’t want all of your REIT investments in one basket, so spread them out to minimize risk.

Using CRE Software To Invest In REITs Appropriately

Commercial real estate software like Quarem can help with several areas of CRE investments, including REITs. Here are some of the REIT-friendly features you’ll find in Quarem:

  • Critical date tracking: for investment timing decisions and remembering key dates.
  • Intuitive reporting: To build a dashboard with REITs for easy tracking and forecasting.
  • Task to-do lists: So you can manage REIT-related processes, set reminders and share insights with any team members.
  • Market insights: Get real-time, up-to-date information on all of your investments and monitor changes in the industry, or news impacting your REIT investments.

If you’re interested in seeing how Quarem can help with REIT decisions, request a demo today.

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About the author 

Guy Gray

Guy Gray serves as Chief Operating Officer overseeing our technology and client services teams. He is responsible for guiding Quarem application development, networking and security, as well as new client implementations.

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