Description

Reit financial model can play an important part in an investment portfolio because it can offer a strong, stable annual dividend and the potential for long-term capital appreciation. REIT’s total return performance for the last 20 years has outperformed the S&P 500 Index, other indices, and the rate of inflation. As with all investments, Reit financial model has their advantages and disadvantages.

On the plus side, Reit financial model is easy to buy and sell. Most trade on public exchanges—a feature that mitigates some of the traditional drawbacks of real estate. Performance-wise, REITs offer attractive risk-adjusted returns and stable cash flow. Also, a real estate presence can be good for a portfolio. Because it provides diversification and dividend-based income—and the dividends are often higher than you can achieve with other investments.

As a bonus, the Tax Cuts and Jobs Act of 2017 allow taxpayers to take advantage. Of the qualified business income (QBI) deduction. The deduction is the QBI plus 20% of qualified Reit financial model dividends or 20% of the taxable income minus net capital gains. Whichever is less.

On the downside, Reit financial model doesn’t offer much in terms of capital appreciation. As part of their structure, they must pay 90% of their income back to investors. So, only 10% of taxable income reinvest back into the REIT to buy new holdings. Other negatives are that REIT dividends are taxed as regular income, and some REITs have high management and transaction fees.

The Securities and Exchange Commission (SEC) recommends that investors should wary of anyone who tries to sell REITs that aren’t with the SEC. It advises that “You can verify the registration of both publicly traded and non-traded REITs through the SEC’s EDGAR system. You can also use EDGAR to review a Reit financial model annually. And quarterly reports as well as any offering prospectus.”

It’s also a good idea to check out the broker or investment advisor who recommends the REIT. The SEC has a free search tool that allows you to look up if an investment professional is licensed and registered.