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Real estate investing

As an alternative investment class, real estate offers both the potential for predictable rental income, as well as the potential for longer-term investment growth.

Along with attractive risk-adjusted returns, real estate investing has historically provided investors with several valuable benefits including:

Non-correlated portfolio diversification

Appreciation like a stock with stability of income like a bond

Hedge against inflation

Inherent tax advantages

5 ways to invest

Indirect ownership

Real estate investment trusts (REITs), real estate mutual funds and exchange-traded funds (ETFs) all offer a low-cost, liquid way to invest in real estate. 

Indirect ownership
(Privately non-traded)

There are also some private, non-traded REITs and real estate private equity funds. Because these are less liquid, they tend to deliver more of the non-correlated diversification benefits that make real estate such an attractive portfolio component.

Direct ownership

If you’re starting a business, there are many advantages that come with owning your real estate. Along with greater cost predictability, owning your facility offers potential tax benefits, long-term asset appreciation and an income stream (if you’re not the only tenant).

Direct ownership
(Single credit tenant)

For predictable monthly income, you may want to consider owning a single tenant property leased to a high creditworthy tenant who signs a long-term lease.

Direct ownership

Multi-tenant properties take more time to manage and have higher management expenses due to lease/tenant turnover. But in a rising cost environment, having tenants whose leases mature at various times lets you re-price leases at higher rents to improve your investment return.

What are REITs?

Equity REITs are companies that own, manage and lease investment-grade, income-producing commercial real estate.

  • At least 75% of the REIT’s assets must be made up of real property
  • At least 75% of the REIT’s revenue must come from real estate
  • At least 90% of the REIT’s taxable income must be distributed annually to shareholders
  • Any taxes are paid directly by the REIT shareholders

But their greatest benefit is that REITs provide smaller investors with a way to actively participate in the commercial real estate sector, without the burden and risk of property management.

Getting started

Real estate investing offers a tremendous opportunity for substantial returns, but can be challenging, time consuming and illiquid. Trusted advice can get you moving in the right direction. Your financial team will help develop and implement an investment strategy specifically aligned to your goals.

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