Invest in Real Estate - Without Becoming a Landlord!

Real Estate This Week

This episode of 'Real Estate This Week' explores how investors can participate in real estate without becoming landlords by using Real Estat

Key takeaways

• REITs allow investors to gain exposure to real estate through publicly traded stocks without owning physical property or managing tenants.
• REITs are required by law to distribute at least 90% of their taxable income as dividends, providing consistent income streams.

Main topics

• Real Estate Investment Trusts (REITs) explained
• Comparing REIT investing to traditional landlord ownership

Notable quotes

You're not having to manage them or you're not having to deal with the building going vacant. You're owning it like, yes, I own real estate, but I buy it in stock wise.

Conclusion

Investing in real estate through REITs offers a low-effort, high-accessibility

Transcript preview

Speaker 2 (0:03) This is Real Estate This Week with Stephen Gaskell. 17 years on air and online, helping you succeed in buying, selling, and investing in property. The best real estate strategies out there just for Speaker 3 (0:20) you. Speaker 3 (0:24) Welcome to Real Estate This Week. Hi again, I'm Stephen Gaskway, and I'm delighted you're here as we look at how to invest in real estate without becoming a landlord. That's right, investing. But you don't own a piece of property. There's no tenant, no mortgage, and no keys. How do you do that? The answer is REITs. Real Estate Investment Trusts, and joining us now is an expert in REITs. Cynthia Shelton is the Senior Managing Director of the Investments and Capital Markets Division at LQ Commercial Group Real Estate, located all over Florida. She's also the former president of the Florida Realtors and the past president of the Certified Commercial Investment Member Institute, known as the CCIM. Cynthia is also the recipient of the National Association of Realtors' highest honor, its Distinguished Service Award. Cynthia, welcome to Real Estate This Week. Speaker 1 (1:32) Thank you, and I'm looking forward to chatting with you. Speaker 3 (1:35) I am so glad you're here because this is such a fascinating topic. How to invest in real estate without being a landlord using real estate. investment trusts. Cynthia, to begin with, can you give someone who has no idea what a REIT is a little primer on how it works and what it means to them? Speaker 1 (2:01) Sure. A REIT stands for real estate investment trust. It's a company that is usually public on the New York Stock Exchange or one of the stocks. There are private REITs, but I'm going to talk mainly about more of the public side. And the public REITs buy assets, real estate assets of all types, and lease them or sell them or upgrade them and pay to the people who want to buy stock in that company dividends. So it's a great opportunity because they have to pay, by the way, 90 % of their taxable income out. to their shareholders. So it's a great opportunity to look into it if you're thinking about it. They're a great place to work. I work for one. And they have certain rules they have to abide by. But if you Google REITs, you'll get all kinds of comments and questions and thoughts that will help you. Speaker 3 (3:02) I see. So to put what you just said in very sort of kitchen table terms, You are investing in real estate, but instead of buying property and being a landlord, you are investing in a company that buys properties, and it's just like stock. Speaker 1 (3:23) 100%. And the best thing ever is you can track them because they don't sell the properties very often. And you're not having to manage them or you're not having to deal with the building going vacant. You're owning it like, yes, I own real estate, but I buy it in stock wise. And so I get paid dividends, how the company's doing with all their properties. And I can look and see what they're buying. and how they're doing. And Speaker 3 (3:54) like most stocks, you can probably roll those dividends over. Speaker 1 (3:58) Yes, you can do it either way. You can roll them over to keep investing, or you can have them distribute to you normally quarterly. A few might do monthly, but not many. Speaker 3 (4:09) This is so interesting. And so let's walk through it starting at the very beginning and compare a real estate investment trust to actually buying a piece of property and being a landlord. So if I wanted to invest in real estate and I went the landlord route, first of all, I'd have to have a down payment, which we know for investment property is typically higher than it would be for a residential purchase, correct? Speaker 1 (4:39) Yes, it's quite a bit higher. Like you can do residential for sometimes 10 % down, maybe 20. Commercial, you're looking at 40 % down on average, maybe 30. Every now and then, if you're lucky and you've worked with a bank, they may give you 20