blog . invest  .

3 minutes reading time (598 words)

Are REITs Reliable Investments For Passive Income Stream In the US?

What you may not have known about real estate investment trusts (REITs) for passive income. Linda Richardson, a New Jersey-based financial content writer and guest writer, opines.

Thanks to the coronavirus, the recession has officially hit the world economy. Real estate investment trusts (REITs) have suffered very hard. REITs are appealing to retirees. But are they lucrative and reliable investment options in the US?

[RELATED: How to make money in real estate without buying physical properties.]

What is a REIT?

A real estate investment trust (REIT) is a type of investment vehicle that allows anyone to invest in real estate without owning physical properties. It allows investors to generate a passive income stream in the form of dividends and hopeful capital gains. There is no need to buy a property and block a huge amount of capital. As the name suggests, the trust owns and manages various types of properties in the US (retail, commercial, residential, etc.). A few examples a trust can own and manage are hospitals, shopping malls, apartment complexes, data centers, retail outlets, offices, hotels, and so on.

When you buy a REIT stock, you own a tiny portion of the real estate properties owned by the trust. The rent collected from these properties is then distributed to all the shareholders in the form of dividends. As required by law, REITs have to distribute at least 90% of its income to shareholders. Shareholders can then make great profits and reap the rewards. Investing in REITs is one of the smartest money moves to make in your 20s. REITs have many benefits.

Benefits of REITs

REITs are tax-efficient. They do not have to pay corporate taxes to the government. This is good news for investors because they [REITs] can distribute those savings to investors. REIT investors are required to pay taxes on the dividends or any capital gain earnings. Also, when you invest in REITs, you  don't have to perform property maintenance or deal with unruly tenants. The trust does all the heavy lifting. REITs also afford investors great returns.

Over the last 2 decades, REITs have provided better returns than corporate bonds. Overall return is higher than the S&P 500. Since May 1996, the Vanguard Real Estate ETF (VNQ) has yielded superior returns than the S&P 500. As with with regular or common stocks, investing in REITs has risks and companies sometimes increase or decrease dividend payments when they start facing capital issues. 

[RECOMMENDED: How to invest $1,000 to buy over 7,400 stocks & grow your money.]

What is the minimum amount that you have to invest?

You don't need to have a lot of money to invest in REITs. Congress created REITs as an investment vehicle to allow the regular person to invest in real estate with very little capital. You can start your journey as a REIT investor with as little or as much money as you want to. You only need to have enough money to buy at least a share of a REIT stock or REIT ETF. Some REITs are more expensive than others. Retired individuals and those who want to enjoy a passive income stream are the ideal candidates for REIT investments.

The bottom line

Have you ever dreamt of buying a hotel or a shopping mall or data center?

REIT investment allows Americans to extend the periphery of their dreams. It allows them to invest in and own real estate properties that are beyond their affordability and generate a passive income stream and grow their 'money tree' gradually. With the right selections, REIT investments can be a reliable source of passive income stream.

Ready to start investing? Choose a platform below.

A Winning And Proven Coronavirus Investing Strateg...
3 Absolute Money-Making Growth Stocks For Your $12...

Related Posts



No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Monday, 15 July 2024

Captcha Image

By accepting you will be accessing a service provided by a third-party external to


Stock Screening Tool

Stock screening and investing made easy with Stock Rover. Discover your favorite stocks! Why Stock Rover? Disclaimer.


Investing is for Everyone.

Investing is one of the best ways to build wealth quickly. Let's get you started below.

Investing can be intimidating when you're just getting started. Let's simplify it for you. Let's start with the building blocks.

Read our latest blog articles about investing, financial freedom and debt management. Give us your feedback.
Got $5, $50, $100, $1,000 or more? Investing your way up to financial independence is achievable.  Ready to get there?

#Featured Stories

#Sponsored Content

#Most popular

How to invest in real estate without buying properties.

Can you invest in real estate without buying physical properties? Yes, indeed! Here's your guide...

Poor? How to invest $50. Here's what we recommend.

Got $50 collecting dust? Get on the path to financial independence. Here's what to buy...

Cash is trash, not king. Invest your cash to build wealth.

Got cash sitting around? Being robbed by banks? Your money is losing value. Invest it to build...

#Product Reviews

Stock Rover: stock screener!

From stock screening and research to full portfolio analysis, we haven't found a more robust screening tool.
Read more

SoFi: Simple investing platform

Investing has never been so easier with SoFi. With a simple app, start investing in stocks, ETFs & Crypto.

Read More

Stock Rover: Stock Screener.

From stock screening and research to full portfolio analysis, we haven't found a more robust screening tool.

Read More

#Let's Invest!

Disclaimer: We may receive a commission for products or services you sign up for. Thanks! Full disclaimer.

#Get in touch.

Please fill out the form below. We will get in touch soon.

#Become a fan.

Subscribe for our latest updates, blog posts and investing tips. No spamming!