REITs for Your Portfolio: 5 Reasons Why to Consider Them

The current economic climate is challenging. Interest rates are rising, and we are seeing inflation continue to balloon.

Investors are keeping a close eye on their portfolios and adjusting where needed.

Intuition tells us that with rising interest rates, real estate investments are increasingly risky and will result in lower and lower returns. But does this conclusion also apply to REITs?

Real Estate Investment Trusts (REITs) offer a different avenue for including properties in your investment planning.

What is a REIT?

A REIT provides the opportunity to indirectly put money into real estate via an entity that owns and operates income-generating properties (think residential rentals, hotels, commercial leases, etc.).

Although the property (and subsequent share) values may increase, the bulk of the income generated by REITs is in the form of dividend returns.

The Three Types of REITs

Equity REITs: These REITs generate income through rents paid. They have a low rate sensitivity. A strong management firm is vital to the success of an equity REIT.

Why it Could be Time to Consider REITs