Thursday, February 26, 2009

Go Online to Find Good Investments: REITs

The Internet – Your Best Friend in Investing

Are you still of the old fashioned school where you think the best way to invest in stocks, REITs, bonds or mutual funds is to call your broker and ask him to make a buy for you? Why is that? By now, you should have realized that we have come a long way and the Internet is a way that you can take on these investments for yourself.

Many people are reluctant to take their own investing into their hands through the Internet. Their reasons vary from thinking they don't know enough about their specialty market to that they can't make the same kinds of buys as a broker to thinking that their broker knows more than they do and will make sure they get in on a good deal. Let's look at each of these for a minute.

I don't know enough about my market.

If you are one of the people who think you just don't know enough about your market to matter, that's only because you aren't trying to. If you invest in REITs, for example, there are wonderful websites that allow you to learn everything you would ever need to know, plus keep on top of what is happening right now, like

Learning enough about your market to make wise decisions only takes a few minutes a day to do and can take you a long way in the profitability of your investment portfolio.

I can't make the same types of buys as my broker.

Think again. While your broker may have a really fancy computer system on his desk that he uses to make your purchases happen for you, chances are he is really using a program that is just as simple as one you could use to make the purchase. For example, is a complete brokerage firm of real estate investing that will allow you to buy and sell, as you need to, from the comfort of your own computer.

My broker knows more and will make sure I get good deals.

Unless you are sinking millions of dollars a year into your accounts, you’re not big enough for a broker to call you. If your broker hears about a great buy possibility, he is going to call his most prized clients first. Those are not the friendliest ones, but the ones who stand the chance to make him the most money. After all, this is business. This means you are likely not going to get that phone call and are going to miss out on the deal.

On the other hand, if you were signed up with a company like you would see those news stories that are going to impact the market as they come through and also be able to take a peek into the minds of the analysts on their blog to get the inside track on what is happening in your investment world. Then you can make the decision to act right away and reap the rewards.

REITs for Asset Liquidity

About REITs: Real Estate Investment Trusts

Real Estate Investment Trusts (REITs) were created in the 60's so that all investors would have access to income-producing real estate through the purchase and sale of liquid securities. Before REITs were created access to investment returns of commercial real estate equity was only available to institutions and wealthy individuals.

For over half a century, REITs have become an important part of the United States economy and investment markets. United States REITs have grown from ninety billion dollars to over three hundred billion dollars in the past decade and they have gained popularity all over the world.

During their early years, mortgage Real Estate Investment Trust dominated the industry, providing debt financing for commercial or residential properties through investments in mortgages and mortgage-backed securities. Interest in equity REITs which own and manage commercial properties was limited because of the requirements that ownership and management of assets remain separate. This restriction was lifted with the passage of the Tax Reform Act of 1986 which allowed REITs to both own and manage properties. Now, more than 90% of publicly traded United States REITs are equity REITs that own and manage commercial real estate. Most of their income is derived from rents owned by companies across the nation.

There are certain guidelines and standards in place that must be followed in order for a company to qualify as a REIT in the US. The Internal Revenue Code requires at least seventy five percent of total assets be invested in real estate which realize at least seventy five percent of its gross income from rents from real property or interest from mortgages. They must also distribute at least ninety percent of taxable income to shareholders annually in the form of dividends.