Are REITs a good alternative to buying real estate? Anyone invest in ...

For my retirement, which is decades away, I am investing my IRA and 401k monies in higher risk mutual funds since I intend to leave the money in for a long time.

But I also have money I'd like to invest in lower risk (and lower reward) investments for the shorter term.

Real estate seems like something I'd like, but it is a huge commitment both personally and financially. So I am thinking of REITs as an alternative.

Is the payoff of a REIT about what you'd get with a rental property? It seems like with a rental property worth 100k, you may get 5k a year in income (assuming the mortgage is paid off) after subtracting various expenses. And a REIT generally offers a dividend of roughly that (about 5% a year) so the income seems the same. Or maybe not, multi unit complexes probably pay more than 5% a year. But they are less liquid, plus you'd assume the people who run a REIT would have far more experience than I would.

I don't know if now is a good time to invest in REITs since the housing market may start to grow over the next 10-20 years. The US population is expected to hit 400 million in the next couple decades, so you'd assume real estate demand would go up (but if nobody has good jobs, it doesn't matter either).

I think I really should've put money into REITs around 2008/2009 when housing was down and I assume the stocks were lower. But live and learn.

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Last edited by Wesley Clark; Today at 08:41 AM.

Source: http://boards.straightdope.com/sdmb/showthread.php?t=686766

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