Finance and Real Estate: REITS

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Birgo

The real estate world is intrinsically connected to other professional fields. The links vary, but in the financial sector, there is a concept which has become very similar to the stock market. A REIT, or real estate investment trust, is a perfect example of the intersection of finance and real estate.

Risks and Benefits of REITs

For an involved investor, REITs are a great way to ensure cash flow continues. An example of a REIT investment is an investment in an apartment building, which collects rent, and is somewhat unrelated to markets. 90% of income in a REIT is to be paid to the investors, which is a remarkably high percentage.

Important Cautions to Consider

One goal that all stock investors have is to have a diversified portfolio in order to ensure they are not too connected to one market in particular. Having all “your eggs in one basket” could prove to be risky. This would result in significant personal losses, which nobody wants to incur. However, while a REIT is not risk-free, the risks associated are lesser than those of a standard stock.

Continued Investment in Pittsburgh’s Growth

The main risk associated with a REIT is value related, due to taxes and principals. However, in Pittsburgh in 2017, a REIT seems like a solid investment. REITs are becoming more and more popular, and this is evident by the increases in capital being invested in these trusts. Over a 2 year span, mergers and acquisitions in real estate increased from nearly $18 million to roughly $51 million. The increase in capital is an indicator that real estate is trending in the right direction.

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