
With the current housing market meltdown, it’s hard to think about investing in real estate. Moreover, the current tight credit market and lack of cash makes it even harder to buy an investment property even if you want to. This is where REIT comes in. Personally, I think it’s an attractive investment option regardless of what the market is doing short-term.
REIT, or Real Estate Investment Trust, is a corporation that invests in real estate. To qualify as a REIT, a company must satisfy three criteria:
When you invest in REIT, you are investing in a portfolio of real estate properties and/or mortgages, depending on the type of REIT you own.
I think investing in REITs is an excellent way to diversify your investment portfolio and generate income. Personally, I have about 10% allocated to REITs in my tax-sheltered accounts — i.e., 401k and IRA. Here are some reasons why I think REITs are great:

All posts by Pinyo
Comment Rules: Constructive criticism is welcomed. Please use your PERSONAL name or initials and not your business name or URL, as the latter comes off like spam and I'll most likely delete your comment. Have fun and thanks for adding to the conversation! Here's our comment policy and guidelines.
If your trackback does not show in 24 hours, please resend to this trackback URI.
| High Interest Savings Accounts | 1.51% |
| High Yield CDs (1-year) | 1.75% |
| High Yield Checking Accounts | 1.46% |
| Best Credit Card | TrueEarnings® |
| 0% APR Balance Transfer | 6 mo |
| Lowest Interest Rate | 9.75% |
| Best Cash Back Reward | 5% |
This site contains information about third party products and services, such as credit card offers, online banking, discount brokers, and credit score services. While we endeavor to ensure that the information presented on this site is accurate at the time of publication, any offers and rates shown on Moolanomy can and do change without notice. Visit the official site of the offer for up-to-date information.
For additional information, please review our Terms and Conditions.
Nice post Pinyo! I have been curious about REITs for awhile now. Doesn’t Vanguard have REIT funds?
Thanks for the link – I never did end up buying VNQ but I have allocated 5% of my portfolio to REITs.
Mike
@Eric – Yes, Vanguard has a REIT ETF calls VNQ.
@Four Pillars — I have some VNQ and SSREX, and they are both down close to 50%. However, the income is still strong, and I think it’s a good time to start building REIT position if you don’t have one already. That said, most of my REIT is in my 401k.
There are timber REITs too. They don’t quite have the same properties as the pure timber plays the big endowments make, but they have some interesting characteristics that can help a portfolio. I think the only ones are PCL, PCH and RYN.
Thanks for the reply Pinyo!
I don’t have any ETFs in my Vanguard IRA because I believe they charge a transaction fee everytime you contribute right? Since I contribute monthly (or sometimes bimonthly), does that make VNQ an unattractive investment (compared to an equivalent index fund somewhere else?)
@Eric — If you are investing small amount monthly, you should look for REIT mutual fund instead, particularly the on that is no-load and no transaction fee. No load, no transaction fee mutual funds are excellent for this type of investing.
Exactly what I was thinking. Thanks for the confirmation Pinyo. Your prompt replies (and great posts of course!) always keeps me coming back.
@Eric – No problem. Thank you.
New type of investment but may i know the minimum amount that can be invest?
@imDavidLee — REIT is not new. It has been around a long time. As for the minimum, you will have to check with your broker. You can buy as little as one share of a REIT ETF, or $100 if it’s a fund.
Is it possible to setup a peer to peer lending group for investing in and lending out money for investment properties?
i suppose it would like a REIT, right?