Rehena Hai Castle Case Study

Advantages to Investing in Real Estate Investment Trusts Part Four

Professional Management

Lastly, Real Estate Investment Trusts are businesses that are run by well qualified professional investors. As such, they have their methodologies in place and make decisions based on them.
It is highly unlikely that the management of Real Estate Investment Trusts makes erroneous decisions regarding managing any given property. This professional management is worth a lot of money and individual investors would simply not be able to afford it and the increased cash flow that it brings to the table.
Since a lot of investors pool in money and each of them only has to pay a slice of the management fee, they can benefit from the financial and operational expertise that many of these real estate investors bring to the table.

Diversification

REITs provide the opportunity for diversification to small ticket real estate investors. Real estate investments require a significant financial commitment on the behalf of the buyer. As such, investors can only invest in a few places. Therefore, they are exposed to the risks and returns of those micro-markets. Anyone familiar with investing knows that putting all your eggs in one basket is a dangerous proposition. This is the reason many people believe that real estate is an extremely risky proposition.

However, Real Estate Investment Trusts provide an opportunity to diversify this risk. This is because these trusts own a wide variety of properties. They own apartments, condos, offices, retail establishment etc and they own these properties in different markets. As such, they have sufficient diversification to protect themselves from the risks any one micro-market may present. This is what has made REITs a preferred choice for many investors.