Why this particular asset is worth adding to your portfolio


Many investors seek to incorporate real estate into their investment strategy. Buying real estate is the most obvious way to do this, but there is another way to invest in real estate: by buying shares in a real estate investment trust (REIT)!

REITs are offered in several different forms including real estate investment trusts, mortgage funds, and real estate hybrid funds. Some focus specifically on certain types of real estate, while others may acquire multiple forms of real estate.

In this article, we will focus on retail REITs. More specifically, we’re going to talk about REITs that focus primarily on grocery-based real estate in the United States. Is there a reason why a grocery store or grocery-related shopping center is better than other types of retail space?

By the end of this article, you will have an answer!

What are REITs?

A REIT is a type of company that buys, manages, or finances multiple properties. Every property they handle generates income; They take this real income and pay out 90%-100% of the taxable income to the investors in the form of dividends.

The REIT is responsible for property management, rent collection and general maintenance. Investing in a REIT allows investors to benefit from the income generated by real estate, without incurring any actual responsibilities.

The only thing the investor is responsible for is the provision of capital. The REIT will handle the rest.

REITs are often publicly traded on major stock exchanges (Publicly Traded REITs), although some are considered non-public REITs. These REITs are not listed on the stock exchanges, but the general public can still invest.

Finally, there are private REITs. These funds are regulated by the SEC (Securities Commission), unlike the other two types. As the name suggests, these funds are not open to the general public.

Why should I invest in grocery store REITs?

All retail REITs have some form of real estate income, regardless of the types of real estate they deal with. Real estate in a REIT is rented out to generate income. This is the primary form of real estate income for REITs, whether you’re talking about retail REITs or multi-family REITs.

However, income from rentals is one way retail investments can generate revenue. It can also appreciate the value of the property itself, which in turn leads to higher rent payments once the current lease expires.

Of course, this is by no means foolproof, but it is more common with certain types of property than others. It is impossible to predict appreciation with a mixed-use property, but it is almost certain with active retail properties.

This is what makes investing in retail REITs focused on grocery stores and surrounding real estate such a successful endeavor. Groceries are essential, which means consumers will always need groceries (even if the economy takes a turn for the worse).

The same cannot be said for other types of businesses, such as phone stores. When the economy is doing well, a phone store is likely to be able to sell a lot of phones and afford the rent for them easily.

However, if the economy collapses and people are no longer interested in — or able to — buy new phones, the phone store will start losing revenue. If revenue drops significantly, the store may have difficulty paying rent. If this is the case, the store is unlikely to renew the lease.

This is not the case with grocery stores. While grocery-related hubs are certainly vulnerable to changes in the economy, they are somewhat protected by the fact that they provide basic items. This fact makes it unlikely that their business will suffer severe financial hardship. In turn, it is fair to assume that the rent will always be on time!

An alternative to REITs

As we’ve proven, investing in grocery store real estate is an excellent way to earn predictable real estate income. However, REITs do not focus on individual characteristics. Instead, these real estate companies allow you to buy shares in multiple portions of income-producing real estate.

This means that even though a portion of your investment may be economy-hedged, chances are, your shares of the REIT include unhedged commercial real estate.

Fortunately, there is a way to invest in grocery centers and only groceries: by investing through First National Realty Partners!

Whereas a REIT allows you to invest in multiple portions of income-producing real estate at once, an FNRP allows you to select the specific commercial real estate you wish to invest in. The company screens all of its properties and anchor tenants, resulting in high-finish properties from well-known tenants (well-known brands).

Similar to a REIT, an FNRP handles property management, selection, and acquisitions with its management team. This narrow focus and limited pool of tenants allows the company to provide stable revenue in the form of monthly payments or quarterly payments to investors.

Prepare to invest in grocery store REITs

Finding income-producing properties is not as difficult as it used to be. These days, even non-accredited investors have the opportunity to invest in high-end real estate through several real estate companies.

For most people, investing in a grocery store REIT provides the perfect balance between predictability and performance. However, private offerings can often provide greater returns than public offerings.

If you’re interested in taking advantage of one of these exclusive and special offers – or just seeing how performance varies – you can click here to learn more about FNRP.



Source link

Related Posts