With rising Huntsville real estate sales, many people looking to invest are starting to wonder if Real Estate Investment Trusts are once again a potential opportunity. Home sales have gone up for the past six months in a row, homebuilding price indexes are rising and investors are turning optimistic. Is it really a good time, though? 

What are REITs?

REITs are Real Estate Investment Trusts. These trusts invest in property then sell shares to people or businesses. If the REITs make a profit, that profit is split between shareholders as dividends. Many investment trusts cover a full portfolio of Huntsville real estate and other real property, rather than just one property. In the past, they’ve been incredibly popular because they trade like stock and dividend yields are normally at the top of the market. 

Not All REITs Are Created Equal

It’s important to remember that real estate investment trusts come in different shapes and sizes. As well, REITs report rental income, rather than sales, as revenue. Keeping rental income in mind, it becomes obvious REITS with long-term leases and high occupancy rates are generally better than others to invest in. Also, the higher the occupancy, the easier it is to raise rental rates (although this is probably not good business at this time due to the current real estate market). 

(more…)

Bookmark It