As an investment, REITs have long had advantages over owning property directly.
This advantage gap is widened by new federal tax rules.

As Generation X and millennials inherit their baby boomer parents’ assets amid the so-called Great Wealth Transfer, some will look to invest it in property to generate income.
This property might be a duplex, an apartment building or, depending on the location, a single-family house that could eventually become a retirement home.
Yet many aren’t aware that because of the various costs and risks involved, becoming a landlord — a role fraught with headaches — may not turn out to be profitable. A hands-off alternative to direct real estate investment are real estate investment trusts. These firms sell shares to investors, use the cash to buy residential, commercial and industrial property to lease out, and pay dividends to shareholders.

As an investment, REITs have long had advantages over owning property directly. This advantage gap is widened by new federal tax rules.

More from FA Playbook:
A somewhat overlooked provision of the tax law that went into effect last year allows individuals hefty deductions on REIT income. Investors filing jointly with taxable income of less than $315,000 — and those filing individually with taxable income of $157,000 — are eligible for a 20% deduction. Investors with higher taxable income — up to $415,000 filing jointly and $207,000, individually—are eligible for deductions on a reduced scale.

While the tax legislation makes a REIT more attractive, it perhaps makes direct real estate investment less so. A provision that’s received widespread attention is the new $10,000 cap on the itemized deduction of state and local taxes, much is which is from property tax.

This has caused consternation aplenty in regions where high property values have long resulted in substantial deductions for homeowners. For investors in residential real estate, especially in expensive areas, this new provision is paring post-tax profits.

The tax legislation also reduces the maximum allowable amount of the purchase price for mortgage interest deductions from $1 million properties to those selling for $750,000.
These changes, along with the new deductions on REIT income, can mean improved net returns from investing in REIT shares as opposed to direct property ownership. Moreover, the new tax law includes business-tax changes beneficial to REITs and, ultimately, to their investors.

Most REITs are publicly traded like stocks, making them highly liquid — unlike most real estate investment trusts.

Like stocks, they’re bought and sold on major exchanges throughout the trading day. Some REITs own property used for a variety of purposes, but most specialize, variously owning real estate used for apartment buildings, health-care facilities, hotels, shopping malls, commercial office parks and industrial property for factories, on-line retailing fulfillment centers and server farms.

As some REITs can be highly specialized (such as cell phone towers), selecting them for investment should come after considerable analysis of specialized markets. REITs are considered an alternative asset — one that can diversify portfolios composed of traditional assets, such as stocks and bonds.

Read More…

 

7¢ Skip Tracing – Guaranteed lowest price on the market for the best quality data.

Don’t just take our word for it. Try us out by running a small list first to see the tier 1 data for yourself. We are offering non-members access to member pricing, so you can experience the Skip Force Difference and improve the quality of your lists.

🔥Pay wholesale price for quality data
🔥Receive the TOP 3 Phone Numbers
🔥Discover which phone numbers are best
🔥Learn the BEST Time to reach a contact
🔥We can take your old list, grade it and come up with the
BEST NUMBERS to contact
🔥Develop a SNIPER MARKETING Plan
🔥Increase ROI and TEAM MORALE

We have extended this special but cannot afford to keep this offer running for long.

Have Questions? Reach out to us, we’re here to help.
Call us at: 866-962-8190

Get Started Now

About Skip Force LLC.: Skip Force is a SaaS company based in Austin, TX. Founded in August of 2019, Skip Force has developed solutions, for real estate investors and resellers, to streamline the skip tracing process to effectively close leads.

Related News

Property Data
Property Data Benefits and Walkthrough

Property Data Benefits and Walkthrough: Property Data Benefits and Walkthrough – So one of the things we do extremely well in our investment business is generate a ton of leads. We generate about 50 leads a week of qualified leads. That means people, that two tiers. One, either they’re in mass of amount of pain […]

Short-Term Rental Investors
Homebuyers Face New Competition from Short-Term Rental Investors

Short-Term Rental Investors Have you ever had the feeling that you can’t catch a break? American homebuyers are definitely starting to feel that way. Short-Term Rental Investors – Have you ever had the feeling that you can’t catch a break? American homebuyers are definitely starting to feel that way. In addition to rapidly rising interest […]

How to Get Started in Multifamily Real Estate
How to Get Started in Multifamily Real Estate

To Get Started In Multifamily Real Estate, You’ll Need To Be Adept At Managing Tenants and Property. How to Get Started in Multifamily Real Estate – Unlike single-family real estate investing, multifamily real estate could provide you with an opportunity to create multiple revenue streams. That’s because you’re likely to have more tenants paying rent […]