New to REITs? Here's Why I Would Buy Realty Income Stock First.
Real estate investment trusts (REITs) are a great way for small investors to gain access to the income available from institutional-level real estate that would, otherwise, be outside of their reach. However, not all REITs are made of the same stuff.
If you are new to the REIT sector, you should probably start with a slow and steady giant. Realty Income (NYSE: O), which has trademarked the nickname "The Monthly Dividend Company," is where I would suggest you begin your REIT journey, especially today. Here's why.
Realty Income buys real estate and then leases it out to tenants. Virtually all of its properties are leased to just a single tenant. However, it is important to note that the REIT makes use of net leases, which means that its tenants are responsible for paying most property-level operating costs, like maintenance and taxes. Although any single property is a high risk, across a large portfolio this model is fairly low-risk. For example, avoiding property-level expenses reduces the impact that inflation has on the company's financial results.
Source Fool.com
