{"id":2196,"date":"2022-08-08T21:34:36","date_gmt":"2022-08-08T21:34:36","guid":{"rendered":"https:\/\/blog.ark7.com\/?p=2196"},"modified":"2023-07-07T17:46:42","modified_gmt":"2023-07-07T17:46:42","slug":"reits-vs-fractional-real-estate","status":"publish","type":"post","link":"https:\/\/ark7.com\/blog\/learn\/in-depth\/crowdfunding-and-reits\/reits-vs-fractional-real-estate\/","title":{"rendered":"REITs vs. Fractional Real Estate"},"content":{"rendered":"
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Because more than 60%\u00a0of Americans\u00a0invest in real estate and more than 44% of American households invest in REIT stocks, you might be curious about what all the hype is about and how you can get in on some of the action.<\/span><\/p>\n

Real estate investing is a great way to earn residual and sometimes even passive income, and there are several ways to get started. The two ways most people are investing in real estate include REITs and\u00a0fractional real estate. In this post, we\u2019ll outline the two so you can make the most informed decision about which one to invest in.<\/span><\/p>\n

What are Real Estate Investment Trusts (REITs)?<\/b><\/h2>\n

REITs are no new concept and have been around for decades, allowing investors to make real estate investments without the need to buy any actual property. How is this possible? The Real Estate Investment Trust buys the properties, from condos to large apartment and office buildings and hotels to storage centers, shopping malls, and more, and rents or leases them to tenants. Investors purchase shares in the Real Estate Investment Trust and the rent that\u2019s collected through the REIT is then distributed to investors via dividends.<\/span><\/p>\n

How it works<\/b><\/h3>\n

Real Estate Investment Trusts are tax breaks for corporations, which is also good news for investors because REITs are required to distribute at least 90% of their profits to their investors in the form of dividends. This is done to help the corporation pay lower taxes while also helping investors get a bigger slice of the dividend pie.<\/span><\/p>\n

Investing in REITs<\/b><\/h3>\n

REITs differ from traditional real estate in that most of them are traded publicly on the stock market, which provides incredible liquidity for investors who are looking to maintain the freedom to buy or sell shares as they please. It also creates a low barrier to entry as the average investor can buy as few as one REIT share for a much lower capital contribution than expected with traditional real estate investing.<\/span><\/p>\n

You can purchase the REITs listed on the stock exchange directly, just as you\u2019d buy any other stock. You can also buy shares of REIT through mutual funds or exchange-traded funds (ETF).<\/span><\/p>\n

There are private REITs that are not available on an exchange. These private REITs may be less accessible to retail investors.<\/span><\/p>\n

Benefits of REITs<\/b><\/h3>\n

The most significant benefits of REITs include:<\/span><\/p>\n