Anyone who has been reading The Elite Nurse Practitioner for a while knows that I’m a pretty strong advocate of owning real estate investments like rental properties. Why? Because it’s a great way to create financial redundancy in addition to building your business, investing in the stock market, etc…
However, I also fully recognize that real estate (specifically owning physical properties) may not be in everyone’s wheelhouse. Managing property (can be a pain) takes time that frankly you’d be better off using to focus on growing your niche practice. And on top of that, it can be a very risky venture that not everyone feels comfortable making.
For that reason, I have another asset to suggest: REITs.
REIT stands for “real estate investment trust“. It’s essentially a company that buys and manages a portfolio of commercial-grade properties. Think like office buildings, warehouses, medical facilities, etc.
REITs are nothing new. They were established in 1960 by Congress as a way to allow individual investors to invest in large-scale, income-producing real estate. Because let’s be honest – owning a hotel is probably not something that’s going to happen for most of us!
What’s the advantage of investing in REITs?
- Higher than average dividends. For a real estate company to be classified as a REIT, it’s required by law to distribute at least 90 percent of its taxable income to the shareholders annually. This can often lead to some pretty substantial dividend yields. Whereas the average stock in the S&P 500 might pay a dividend of around 2 percent, it’s fairly easy to find REITs that pay in the 4 to 6 percent range (and some even higher). A 4-6% dividend payout is a very healthy passive income.
- Liquidity. Publicly traded REITs can be bought and sold just like stocks. So, unlike a rental property where you may be locked in for several years, you can sell your shares of a REIT anytime you’re ready.
- Passive participation in real estate. REITs couldn’t be any more hands-off when it comes to owning real estate. As a shareholder, you get to sit back and collect the income that the REIT produces. Depending on the demands of your nurse practitioner career and/or business, that could be a good fit for your busy schedule.
Again, I’ll remind you to view real estate as an INVESTMENT, not as a business (unless you are managing multiple properties yourself). It’s important to have assets across multiple classes so that it creates financial security. Whether you do that through owning rental properties directly or passively with REITs, that’s up to you. The key, however, is to TAKE ACTION and increase your financial redundancy as soon as possible and get your CASH out of the bank and into some assets that not only appreciate (increase in value) but also CASH FLOW on a regular basis. That is out you become financially independent.