Rental Property

A long-term investment in a rental property can pay off in myriad ways. Rental income provides a reliable revenue stream for owners able to keep their units occupied. Rental properties also act as a tax shelter, since depreciation, property tax and maintenance costs generally are tax deductible. On the downside, a typical day in the life of a landlord can include difficult situations ranging from expensive emergency repairs to non-paying tenants. Some of these challenges can be offset by hiring a property manager to oversee the unit. This comes at a price, costing you about 10 percent of the rental income.

House Flipping

Real Estate Investment Trust

Real Estate Investment Trusts are publicly traded entities that invest in companies involved in real estate. A REIT’s value, notes the Sunday Times, is a function both of the trust’s net asset value and consumer demand for its shares. REITs are similar to mutual funds in that they invest in a variety of companies; however, REITs’ investments all relate to real estate, and they pay out most of their earnings as dividends to investors. NJ financial adviser Chris Cordaro tells CNN Money that REITs are a great diversifier; however, a number of experts recommend restricting REITs to a maximum of five percent of one’s portfolio.

Mutual Fund

References

Resources

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