Real estate can create a more balanced investment portfolio. A portfolio with between 5% and 20% of real estate has better returns and less risk than a portfolio only of stocks and bonds, according to a meta-analysis of academic articles by Morningstar. But for most investors, that might not justify the headaches of managing tenants and repairs for a rental property. A real estate investment trust, a.k.a. a REIT, could be a more convenient solution.
“A REIT is a fund that buys real estate for investors,” says Lee Harbaugh, a real estate agent in Mansfield, Texas. “It’s a passive way to get real estate exposure where you don’t have to worry about buying or selling properties yourself.”
