REIT Redux?

You may have heard that this is a good time to invest in real estate. Unfortunately, you can't quite stretch your finances enough to buy a building, or even a single apartment. A REIT may be the next best thing.

REIT stands for real estate investment trust. It's also sometimes called real estate stock. When you buy stock, you're buying a little piece of the company. With a REIT, you're buying a little piece of a real estate investment. REITs are corporations that own large real estate portfolios and sometimes mortgages.

Even if you can afford to buy a property, a REIT may still be a good investment. You get the benefits of rising property prices without the hassle of being a landlord. REITs are also much more liquid. It can take months to sell a piece of real estate. In contrast, REITS can be sold instantly. They also let you diversity your investment. Why put all of your eggs into a single basket? Instead of owning one house, you can own a small piece of 1,000 houses. Then if property prices plummet in a certain area, you won't lose your shirt. This can be a great thing for a risk-averse investor.

As the nation starts to recover from the economic downturn, property prices will start to rise. That means that now is a great time to invest in a REIT. Unlike with buying property directly, you don't need to worry about getting approved for a mortgage. As long as you have the money, you can buy a publicly-traded REIT.

The one thing you need to worry about is debt. Many REITs have lost a lot of money in the economic meltdown. This makes REITs a higher risk investment than they normally are. However, high risk also means potentially higher reward.