8.1. Is REIT Investing Right for Me?

For most folks, buying individual investment properties is out of the question. Coming up with a down payment to buy real estate and then making ends meet is tough. Then, as a landlord, you have to deal with finding tenants, running credit checks, collecting rents, keeping up with maintenance, and evicting deadbeat renters. Even if you can afford to buy a building or two or three, REITs are a no-muss no-fuss alternative to the hassle of owning individual properties. By owning shares in a REIT, you turn over all those icky property-management tasks to a professional building manager.

8.1.1. The Pros

By law, REITs have to invest primarily in real estate and pay out 90% of their income to shareholders. So when a REIT makes money, shareholders get dividends—and usually attractive ones. In addition, a REIT's share price goes up if its earnings and the market's perception of the value of its holdings and management skills increase. So with the right REIT, you can earn good income and capital gains. (Of course, shares can go down, as many have during the recent real estate market crisis.)