Real estate investment trusts: Pros and cons

An investor might think, ‘You know, I’ve always wanted to own an apartment complex as an investment that generates extra income,’” says John LaForge, senior lead wealth investment solutions analyst at Wells Fargo Investment Institute. “But individual investors may have a difficult time getting a loan on such a big property.”

This is where real estate investment trusts (REITs) come into play. REITs can be purchased like stocks, and they pay investors regular dividends that can serve as income. “REITs are kind of a hybrid of stocks and bonds,” LaForge says. “They have some stock qualities and they trade like a stock, and then they have some income qualities, more like a bond. So adding them to a portfolio can often help diversify your investments.”

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