Want to Make Nice Yields? Turn to Real Estate Trusts

Any prospective investor who has even so much as glanced at the stock market over the past few days/weeks/years knows that putting hard-earned money into stocks is an extremely dicey proposition for all but the most seasoned, battle-tested, and well-funded professional investors.

Unless you know where to look, that is.

The days of ridiculous, overnight gains a la the dot-com boom of the turn of the millennium are over, but high-yielding assets can still be found. No, they’re not found in stocks, or commodities, or currency; instead, they can be found in REITs, or real estate investment trusts.

REITs are publicly or privately-held investment assets that provide the same kind of vehicle for investing in real estate properties as mutual funds do stocks. In other words, you do not have to actually buy properties, just like you do not have to buy separate stocks with a mutual fund. This way, depending on what REIT you select, you can do anything from specific approaches like foreclosure investing to broad commercial investing.

Right now, for investors looking for a secure, stable, and constant flow of income off of investments, REITs are as hot as anything else. You can find great yields – in many cases upwards of 7% – with REITs, while other asset classes like U.S. Treasuries or municipal bonds are delivering substantially smaller yields.

You can generate even more stability for yourself if you get into preferred shares, which tend to generate fixed yields versus yields that can rise or fall just like other maturing assets. At any rate, REITs are promising when you factor in the cost and value of your money versus risk and instability in the system.

REITs are pretty flexible to boot. You can pick REITs that primarily reflect commercial real estate space, as most do. Want to invest in office real estate? The Corporate Office Properties Trust (NYSE: OFC) is one good example. How about single family homes, multi-family homes, townhouses, and other similar properties? Try a residential REIT like MFA Financial (NYSE: MFA).

Search through REITs just like you would mutual funds to find the right mixture of underlying properties and trusts for your investment portfolio. If you want to invest in foreclosures, you can also find REITs to match that need instead of actually going out and buying foreclosures yourself – although that is definitely a good source of income in this market too.