Delaware residents who are building a retirement portfolio might view commercial real estate as an overly complex investment. Purchasing a property, developing it and renting it to tenants can take a lot of time, not to mention capital. All of the responsibilities that go along with being a landlord may not sound like a recipe for a relaxing retirement.
However, due to real estate investment trusts, a retiree can invest in real estate without becoming a landlord. Real estate investment trusts allow a person to purchase shares in a real estate investment firm’s properties and then receive equity payments when the properties earn income. Purchasing some REIT shares in addition to stocks and bonds could be a good way to diversify a retirement portfolio and mitigate risk.
Different types of REITs that specialize in various sectors of the real estate market. For example, one REIT may focus on office buildings that earn rental income while another REIT may develop residential properties in order to sell them. Some financial industry analysts say that REITs and other real estate investment tools have allowed real estate to become a fourth asset class that should be included in investment portfolios alongside cash, stocks and bonds.
A person who has never invested in commercial or residential real estate before might want to talk to a lawyer about purchasing shares in a real estate investment trust. A lawyer may be able to help investors determine what kind of REIT they want to purchase and what percentage of their investment portfolio they want to have in real estate.