REIT Investing for Beginners: How to Generate Passive Income Through Real Estate without Owning or Managing a Physical Property and Beat Inflation with Steady High-Yield Dividends by Lawrance Smith

Chapter 1: The Basics of REIT
Investing
“Don’t put all your eggs in one basket… these words also perfectly
encapsulate the idea of not risking all your money on a single investment.”
(PR Newswire, 2022)
The main idea behind any investment is to create a worthwhile source of
wealth and income. In that account, REIT investing has become an
increasingly popular option, with over 150 million Americans owning REIT
stocks (National Association of Real Estate Investment Trusts, 2023). As a
booming investment option, it offers a great opportunity to expand your
investment portfolio and establish passive income channels. To get started,
let’s begin with a basic understanding of what REITs are, and how they can
help you grow financially.

What are REITs?
Real-estate investment trusts (REITs) are companies that manage, own and
operate real estate and related assets that produce an income (U.S.
Securities and Exchange Commission, 2023). The list of real estate that is
included under such a portfolio is endless: hotels, houses, apartment and
office buildings, shopping malls and even mortgage loans all fall under
assets a REIT can own.
Put simply, REITs allow you to make large-scale investments in real estate.
REITs differentiate themselves as they do not invest in the development of
real estate properties for resale. Rather, they focus on buying lucrative
properties and developing them to make them viable investments.
When I started out as an investment consultant after graduating from the
University of San Francisco, I had a very different idea of what investment
can mean. Over 15 years of hands-on experience, I realized there are many
more opportunities in the investment sector, and that put me on the path to
success in a way I could not have achieved as a consultant. As a stock
investor, I can safely say that, while every investment carries some risk -
and what’s life without it - REITs are one of those investment options that
carry great potential.
REITs come in all types, and most tend to focus their portfolio on a certain
type of property. This simply grants greater expertise in a particular area
and makes the portfolio easier to manage. Other REITs may prefer to
diversify into various property types - it really just depends on each REITs
goals and areas of expertise. REIT assets are categorized into one of 13
general categories (National Association of Real Estate Investment Trusts,
2017):
● Office: Such REITs own, manage and operate office real estate,
renting it out to commercial tenants. Office real estate can include
everything from skyscrapers to suburban establishments. Office
REITs can also subspecialize within the category, preferring, for
example, business districts or focusing on certain types of firms.

REIT Investing for Beginners: How to Generate Passive Income Through Real Estate without Owning or Managing a Physical Property and Beat Inflation with Steady High-Yield Dividends by Lawrance Smith