Last week our article was based the wisdom behind Monopoly; the real estate investment board game. Just as knowing the content and understanding the lessons are important, what is even more important and separates the successful from the non-successful is action. This email will be action oriented and will take a look at how you can invest in real estate with little money. The general consensus is that, to invest in real estate, you need sufficient income however, in this article we will show otherwise.
Real Estate Investment Trust (REIT)
To invest in real estate with little money, you invest in a Real Estate Investment Trust. This is essentially a company (and stock) which owns, and often operates, income-producing real estate. Therefore, it allows individuals to buy shares in companies that invest in valuable Real Estate the same way one would invest in other stocks.
REIT make money through leasing their property and collecting its rents, generating income. This income, in the form of dividends, is then paid to shareholders. Historically, REITs have provided competitive total returns as a result of their high dividend income and capital appreciation.
Types of REITs
Most REITs focus on a specific property type, however there are some portfolios which hold multiple types of properties (REIT ETFs). The properties in REITs include:
VNQ & MPW
These are the tickers of two REITs, each of which will show the benefits of investing in REITs.
VNQ (Vanguard Real Estate Index Fund) is a real estate ETF that captures much of the US real estate market. Here is its’ performance over the past 3 years:
As illustrated in the graph, the VNQ has a general positive trend, meaning it is growing over time, even after its’ drop in March 2020 because of COVID-19. As mentioned in a previous article, it is important to buy more when these drops occur; the crashes are the best time to buy.
MPW (Medical Properties Trust, Inc) is an REIT which acquires and develops net-leased hospital facilities. This is where you will see how inexpensive it can be to invest in REITs. The price of this REIT is only at $22. To buy one stock of this Real Estate Investment Trust, you need $22.
We are aware that REITs distribute high dividends; so let’s compare the dividend distributions of VNQ and MPW to S&P 500’s dividend distribution. S&P 500’s distribution yield is at 1.4%; MPW’s distribution yield is at 5.2% and VNQ’s is at 3.4%. Both of these REITs have higher dividends than the S&P 500. Although the growth of stocks may beat REITs, real estate investment trusts generally have higher dividend income.
These two tickers are just a few examples of what I share with my clients when they take the Wealth Heights course (book here). By investing in stocks for 25 years and consistently beating the market, I have developed simple strategies and a stock selection criteria to help you comfortably invest in Real Estate and gain Financial Freedom. I am humbled by the responses of those who took my course:
“This course is a life changing experience and probably the best investment you will ever make”
“… I’m glad I started that lifetime journey with this course. My only regret is that I did not do it sooner”
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READY TO INVEST IN REAL ESTATE?