In the previous article, we studied what Real Estate Investment Trusts are. They have also become very popular in a short period and are a part of virtually every US portfolio. This trend is also spreading rapidly across the globe.

We did not understand the fundamental factors behind this Real Estate Investment Trust boom. We have listed some of the factors that make these trusts profitable and lucrative in this article. These are the benefits of investing in Real Estate Investment Trusts.

Liquidity

Anyone who invests in REITs will do so primarily for liquidity. Real estate is a class of assets that has a high risk-return profile. It is a great investment that offers high returns but with a lower risk of loss.

Real estate has one major drawback, which is its high illiquidity. Investors who want to sell their real estate investment must wait weeks, if not even months. Real Estate Investment Trusts can help.

Securities sold by REITs can be found on many different exchanges around the globe. They can, therefore, be purchased and sold just like shares in a blue-chip corporation! Investors who invest in Real Estate Investment Trusts get to enjoy a high level of liquidity, which is virtually unheard of in the real estate industry.

Diversification

REITs offer diversification opportunities to real estate investors with small budgets. Real estate investment requires a substantial financial commitment from the buyer. Investors can only invest in certain places. They are, therefore, exposed to the returns and risks of these micro-markets. Anyone who has done any investing knows how dangerous it is to put all your eggs into one basket. Many people think that investing in real estate is a risky business.

Real Estate Investment Trusts offer a way to diversify the risk. These trusts have a variety of different properties. These trusts own a wide variety of properties, including apartments, condominiums, offices, and retail establishments. They also own these properties across other markets. They have enough diversification as a result to protect themselves against the risks that any micro-market could present. REITs are a popular choice among investors because of this.

Choose

Investors have a wide range of options with REITs. Trusts are available in many different types to meet the demands of investors. Some Real Estate Investment Trusts invest only in equity. They buy the property outright, and so benefit from the capital appreciation and cash flow that the property provides over the long term. The returns are, however, variable and subject to the whims of the market.

Real Estate Investment Trusts also provide a debt-based investment option. These funds lend to real estate developers. The fund then passes on a fixed rate of return to the investors. Real Estate Investment Trusts offer opportunities to both risky and risk-averse investors. You can build a portfolio that suits your risk and reward preferences by buying both debt and equity-based REITs.

Predictability

Real Estate Investment Trusts are more predictable than other investments. REITs invest in real estate. The appreciation rate and rental growth rates of real estate are predictable. Cash flows can be accurately predicted from such funds.

The majority of real estate investment trusts in the United States have confirmed their projections for revenues and expenses to analysts year after year. Analysts can now predict cash flows with a high level of certainty.

Real Estate Investment Trusts have consistently performed better than the stock market over the last few years. They have also done so with high levels of certainty. REITs are favored because they have lower volatility and better returns.

Professional Management

Real Estate Investment Trusts, a type of business run by professional investors with high levels of expertise, are a final point. They have established their methods and base decisions on them.

Real Estate Investment Trusts are unlikely to make a mistake in managing a property. Individual investors cannot afford this professional management and the increased cash flow that it brings.

Many real estate investors have a wealth of financial and operational experience. By pooling their money, each investor only pays a small portion of the fee.