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The Ups & Downs of REITs

Micro Real Estate Investment Platforms

Real Estate Investment Trusts (REITs) have recently become much more popular for small scale investors who want to dip their toes into real estate, but don’t want to take the big risk that comes with buying a property of your own. 

The rise in popularity is partially due to the fact that you don’t need a large amount of capital to get started. Owning a REIT is more like buying stock in a building than actually owning it. They are also good if you don’t want to get your hands dirty, as flipping a house can involve a lot of handy work.

REITs like Fundrise, Cadre, or NRIA are an interesting development for the industry, but they do come at a price. You won’t get the same returns as you would from owning your own rental property as the income is dispersed between all of the investors.

The other disadvantage to this investment are the heavy taxes. While REIT returns look a lot like that of the stock market, often around 12% on a good day- they are taxed like normal income, even if you choose to reinvest into the same fund.

While they are a great concept, in reality they don’t play out like you would hope. These platforms are a lot like taking the bus, you pay a small fee and if you pick the right one, eventually you get somewhere near where you’d like to be. On the contrary, if you know your way around real estate, take your own car and make the most of your money.