1. Healthcare REITs

Healthcare REITs invest in hospitals, retirement homes, medical centres (clinics), nursing centres, etc. Healthcare REITs primarily generate income through occupancy fees and private fees. 

Overall, the performance of Healthcare REITs is directly related to the performance of the healthcare sector. But other factors like an ageing population and patient demographics also impact Healthcare REITs. 

2. Retail REITs

Retail REITs invest in shopping malls, standalone retail stores, and other retail buildings. Retail REITs generate income through rent and occupancy fees. 

If the retail sector is experiencing a downturn, its impact will affect the performance and profitability of Retail REITs. Moreover, a large set of consumers have shifted to online shopping.

Thus, you must speak to a wealth coach to understand if you should invest in a Retail REIT. 

3. Residential REITs

Residential REITs invest in rental family apartment buildings, gated communities, and manufactured housing units and represent a significant portion of the REIT family.

Conventional logic states that prime real estate may be located in bustling areas where buying a house may be difficult for a majority of the population. 

This may force individuals and families to rent an apartment which drives up the demand and profit generated by these rental properties. Residential REITs leverage this but may suffer when the real estate market is down.

4. Office REITs

Office REITs invest in office spaces - buildings, complexes, and sometimes coworking spaces. Their primary source of income is through long term lease agreements and periodic rent renewals. 

The pandemic has led to a drastic switch from physical office buildings to fully digital workspaces. However, Office REITs have a stronghold in major areas where energy or manufacturing employees work.

Going online poses a major logistical challenge to these industries which is why they may still require office spaces often located in prime locations. 

In any case, it would be best to consult a Cube Wealth Coach before investing in any US stock. 

5. Mortgage REITs

Mortgage REITs don’t invest in equity which means that they almost always do not physically own real estate portfolios. Instead, they invest in mortgages on the secondary market.

Mortgage REITs generate income through interest payments as they finance income-producing real estate investments. 

Watch this video to know more about the benefits of using an app like Cube Wealth

1. Dual Benefit Of Stocks & Real Estate

REITs help investors buy into the benefits of investing in both real estate and stocks. Given the historical performance of REITs, this dual benefit may be one of the biggest advantages of investing in REITs.

2. Dividends

Like we discussed before, REITs are required to distribute at least 90% of their taxable income to their shareholders in the form of dividends. Some REITs even distribute 100% of their taxable income.

Given the market capitalization, purchasing power and the demand for real estate, REITs have been known to provide competitive dividends over the years. 

This may be a potentially positive aspect of investing in REITs for investors who are on the lookout for possible passive income generating assets. 

3. Easy To Understand 

If you’ve read our blogs on the tips to invest in any equity-linked asset, you know that understanding the stock you’re investing in is crucial to getting the best out of the investment.

REITs fare very well in this regard since the REIT business model is simple to understand - REITs own a portfolio of real estate assets that generate income through rent or mortgage interest payments.  

1. Rising Interest Rates

Historically, REITs have been known to underperform when the interest rate rises. Investors may turn to safer, fixed income assets like bonds during such cases. 

But you can mitigate this risk  by getting US stock advice from expert RIA, Rick Holbrook who offers US Stock Advisory via the Cube Wealth App.

2. Low Liquidity

While REITs can be publicly traded, REITs are less liquid than other stocks. This is down to two factors:

• Repurchase offers do not guarantee completely or even partial sale of the desired REIT stocks
• It may be difficult to find a buyer immediately in case an investor wants to quickly liquidate the REIT stock for cash. 
  

Thus, you must consult a Cube Wealth Coach before investing in a REIT or any US stock. 

3. Market Based Risks

REITs are traded on stock exchanges so naturally, they are subject to market risks that include short term fluctuations due to investor behavior's or interest rates. 

However, Cube Wealth helps you weigh the risks of investing in any US stock with advice from award-winning RIA, Rick Holbrook. Read on to know more.

1. What are the risks associated with investing in US REITs? 

Ans. Risks include economic and market factors that can impact real estate values, interest rate changes, and specific property risks, such as vacancies and property management.

2. Can I invest in US REIT stocks through retirement accounts like an IRA or 401(k)? 

Ans. Yes, many retirement accounts allow investments in US REIT stocks, providing tax-advantaged ways to participate in real estate.

3. Is it possible to diversify investments within the REIT sector? 

Ans. Yes, it's possible to diversify within the REIT sector by investing in different types of REITs, such as those focused on residential, commercial, or specialized properties.

4. How do I track the performance of US REIT stocks? 

Ans. You can track the performance of US REIT stocks through financial news, online financial platforms, or by consulting with a financial advisor.