How Do REITs Work?


I love making videos that are based on your
comments. And frankly many of you asked me about REITs
because it looks like a really convenient way to get in the game of real estate. So, what is a REIT? Is it good? Is it bad? Is it useful? Is it a help? Or is it a hindrance? I’m going to answer all of that today. And I’m also going to share with you my number
one favorite alternative to a REIT. And I think today’s going to give you exactly
what you need to hack the financial game to the next level? So, what is REIT. A REIT is a real estate investment trust. Congress pass this act in the 1960’s that
basically said, “People can come together and form these REITs and people can buy into
them.” And what it is, it’s a group, it’s a security
of a whole bunch of individuals that are collectively going out there and basically inquiring real
estate. Because at the time congress said, “You know
what? We got this 401k, we got this IRA thing. It’s be great if we can help people (Americans)
experience buying real estate. But you see, in an easier manner.” Because dude, if you want to buy your own
home, you got to put 20% downpayment. Then you’ve got everything writing on that
one deal. And that’s kind of high barrier of entry. When it be easier if people could just throw
money in and collectively have someone else in charge of buying it? And that’s essentially what a real estate
investment trust is. Now, there are couple different kind of REITs. There’s equity-based REITs, there’s mortgage-based
REITs. And of those 2 kinds, really your equity-based
REITs, they tend to focus on buying multi-family, commercial properties. You know, street malls. And what they do is they focus prominently
on collecting rents as a source of income for their REIT. But you also have mortgage REITs where they
actually lending on real estate and they make their money based on interest returns. My only beef with REITs is that most of them
seem to have annual dividends that pay out at 6, 7 or 8 percent. And then there is a little bit of ownership
play. And so, there are advantages to REITs. I mean, (1) it’ll get you in the game, right? That’s a positive. And the second thing is is that a REIT actually
allows you to get some diversifications per over amount of properties. But there are some downsides to REITs. Atleast for me. Because remember, by bais, I know how to produce
28% every year on average on my real estate. That’s just what my average tends to be on
my last several thousand of deals I’ve done with people. With a REIT, you’ll lose a high degree of
control. Because now, all of a sudden it’s like, you’re
right, you might get the diversification of being on many projects and property. But I actually don’t have control. I don’t get to decide what we do with the
property. You don’t always even get control of when
you get to pull out of a deal or what that looks like. So, that’s problematic for me. The second problem with REITs is they’re free
structure. You can end up paying a lot of money. Those things can get sucked dry from the inside
making a lot of other people money that you also could be getting your hands on. So, that’s another disadvantage of a REIT. But for me, when I look at REITs and I want
to compare it to what I do in the game of real estate, my preference is have a solid
strategy on real estate, so whether that you’re working with very little or no money at all,
or whether you have a lot of money and maybe saved up in 401K’s, IRA’s or business savings. There’s a way to deploy that into real estate. Instead of getting 6 and 7 percent returns. There’s a way to turn that into 20 to 30 percent
returns. And when you compound that with time, that’s
why real estate produces millionaires. I don’t see REITs doing that for people. Because I’ve known many people that are participating
in them. But when I have the command of the control
to bu a property and 4 years later, with great returns, sell it and trade it for 2. And sell it and trade if for 4. Then guess who gets the benefit from doing
that. You get to benefit from doing that. So, it is a little bit more work but you have
to ask yourself. If a REIT is guaranteed not to give you what
you need or want, then it is really the right strategy. Most of us are putting our money into broken
systems. I put my money in 401k and IRA or REIT. And I do the math and when I retire, it wont
be enough. But that’s what I’m doing with my money. Does that really makes sense to you? Does that sound smart? For me, I would rather say, “Wait a second,
If I use these vehicles and they can’t get me where I want to go, then I have the wrong
vehicle.” And that’s why there’s alternative to REITs. In fact, one of those alternatives you can
get your hands on a copy of my book for free –The Straight Path to Real Estate Wealth. It’ll show you how to buy real estate in your
back yard super profitably with those really high returns. Or you can take short cuts and actually learn
about some of my systems where I partner with people and show them over 10 years how to
start averaging 100% a year or more on your real estate. It’s super exciting stuff. So, I just know some of you are thinking right
now, “Okay, Kris. Give me an alternative to a REIT. What would that look like?” I’m going to give you 2 right now. The first one is if you get your hands on
a copy of my book, it’s free. I just ask that you cover the shipping on
it. And when you read it, it’s going to show you
a 4-step system of how to actually access the best strategy. Local real estate for a newbie. I 100% recommend doing lease option. It’s very simple. It’s something you can do. And it’s a way to get into the game with very,
very little money at all. And in some cases, with no money. So, I’ll break that down for you. It’ll show you how to actually isolate and
use some of my favorite strategies for finding the hot deals that are in your backyard and
then how to get them under contracts so that you can then buy those homes and actually
with this system, you’d on average on entry level basic home. You end up about $500 a month cash flow and
usually 5 grand up front comes back in your pocket and there’s tens of thousands of dollars
that you make as well. So, this book will document that. The second system is for those of you who
say, “Well, Kris. That’s sounds a little bit hands on. And I don’t really know if that’s my game.” Well, here’s what I want you to understand. If you want some help, I’ve got a team of
coaches, a whole program, a system that is design to actually help you do it. So you don’t have to fell like you’re alone. That… In fact, that’s one of the biggest mistakes
that people make in real estate is the read a book and they’re like, “I’m just going to
do it.” I’m going to say, “Back up and get a mentor
and have someone watch your back and see what you’re doing and tell you why not to buy that
property or verify why another property might be a good idea. I wouldn’t have got in the game if I hadn’t
had mentors that have done that for me which is why it is it’s service that I provide for
you. So, that’s one of your options. The other options is to say, “But Kris, I
really want to be totally hands off like a REIT. A REIT is really hands off. I love that benefit.” And if that’s meaningful to you, then I also
have a version of a REIT that simply pays out a whole lot more money where you and I
actually partner up together. And we go to a market place together and my
team of 200 experts will actually find the deals for you. Help buy them on your half. Get them rented out on your behalf. Track the them, manage them and then 4 or
5 years, sell them. Multiply the portfolio and do it all of that
for you. So, whether you really say, “Kris, I got a
lot of money or no money or I want to be super hand on or hands off”, there’s total options
for you. And copy of this book comes with a free consultation
for those that want it. So that we can actually walk you through. Put ourselves in your shoes and say, “Hey,
here’s how we would do it if we we’re you.” Friends, that’s REITs 101. I hope that’s helpful. Thank you so much for joining us today. Make sure that you do subscribe. And if you’re serious about getting into the
game of real estate, click those links below, get with my team and let’s find the best option
for you.

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