Real Estate Investing for Beginners

If you’re like me, accumulating real estate just isn’t in the cards right now. I simply don’t have the resources – much less the administrative back end – to own and manage a group of properties.

Here’s the good news.

Real estate investing for beginners is much easier than you might think. In fact, all of the work has already been done for you.

The best way to invest in real estate is to purchase shares of companies that are in this line of business. These companies are often set up as REITs – Real Estate Investment Trusts – and that is very good for investors.

No need to haggle with lawyers for months as you buy and sell properties when you can simply buy and sell these stocks from your brokerage account.

There are several kinds of REITs but I’m most interested in “equity” REITs. These companies essentially own a pool of properties that produce rental income. This rental income is then passed back to shareholders or used to invest in more properties and grow the overall pool of monthly income.

There are a number of tax advantages that REITs enjoy which enable them to offer higher yields and pass more capital back to shareholders than with many other business structures.

There are even REITs that invest in specific kinds of properties 

Realty Income Corp (NYSE: O) is a REIT that invests in properties occupied by companies like Walgreens (NYSE: WAG), FedEx (NYSE: FDX), Family Dollar (NYSE: FDO), Dollar General (NYSE: DG) and CVS (NYSE: CVS).

Realty Income uses what’s known as a triple net lease, meaning that the tenant covers taxes, maintenance and insurance for the property. These are expenses that would normally be covered by the owner, not the tenant. In this structure, the rent paid is a little lower than if the owner was covering these additional expenses. But the benefit to the owner and, thus, the shareholder is that these lease agreements offer predictable, long-term income with little risk involved.

The company has paid 524 total dividends and increased its dividend 75 times since 1994. What’s more, the company pays its dividends monthly. This means that its already juicy yield of over 5% will compound even quicker if you own the stock in an account with dividend reinvesting.

W. P. Carey (NYSE: WPC) is another REIT that takes advantage of the triple net lease. In fact it is now the third largest REIT of this kind. The nice thing about WP Carey is the diversification offered by its portfolio of properties. Its properties are 27% office space, 26% industrial space, 19% warehouse and distribution space, 14% retail with a mix of self-storage and other properties accounting for the remaining 14% of the portfolio. This diversification will protect it from being hit the way that other REITs, including Gramercy Property Trust (NYSE: GPT), were hit during the financial crisis.

Need more? WP Carey also offers a yield of almost 6%.

Owning real estate doesn’t have to take months of scoping out sites and haggling with real estate agents and lawyers. And you don’t need a lot of money to do it.

Owning REITs is real estate investing for beginners. But that doesn’t mean these aren’t serious real estate investments.

Consider putting some of your retirement savings into stable, long-term and high-yielding investments like Realty Income Corp and WP Carey. It will be an investment that rewards you for years.

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Published by Wyatt Investment Research at