Chapter 7. See What REITs Can Do for You

Location. Location. Location." That's the oft-heard mantra of the real estate investor. And that's good as far as it goes. But a better cry for the Buckets of Money investor might be "Diversification. Diversification. Diversification." That's because there's no better tool for real-estate diversification than what are called nontraded Real Estate Investment Trusts (REITs). They're one of the best-kept cash-flow secrets and least-understood growth-and-income investments. Because of this, I'll do my best in this chapter to cover in detail what they are, how they work, why they're not particularly liked by Wall Street, and, of course, why they're a great investment for Bucket 3A.

Nontraded REITs combine the stability and yield of a bond with the appreciation potential of a stock. Thus, low- to moderately-leveraged nontraded REITs, which I'll describe shortly, may be an excellent choice to add to the annuitized-income part of your Buckets of Money plan.

It's true that real estate suffered a blow to its image in 2008–2009. But by its nature real estate is cyclical, and the aftermath of the meltdown may well offer exceptional opportunities.

We touched on REITs in Chapters 4 and 5, but in this chapter we'll dig into more detail, especially about nontraded REITs. As you may recall, REITs can provide many investors with:

  • A stable income stream from diversified property holdings

  • Appreciation as the per-share price of a REIT rises

  • Dividend growth that can ...

Get The Buckets of Money® Retirement Solution: The Ultimate Guide to Income for Life now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.