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If you own your own home, that could be your largest and most profitable asset. But have you ever dreamed of owning a commercial building? An industrial warehouse? An outdoor retail mall? How about a storage facility, medical building or even a forest? Just imagine that stream of cash revenue flowing straight to you. Sounds great, right? Until…

You discover just how much capital you’ll have to lay out. And, until you discover the day-to-day hassle of managing property. Plus, there’s the liquidity issue. You just can’t call up your broker and sell the property today.

Instead, as an investor, the Real Estate sector is your place to get a piece of the turf, without the headaches of landlord management and leaky toilets.

This sector boils down to three types of investment: private funds, LPs, and, our personal favorite, REITs.

If you have lots of money, you can consider private equity investment opportunities such as real estate hedge funds or tenants-in-common (TICs). With these investments, other people are paid to manage the investment pool and underlying properties, and to collect the rents. Still, your capital must be committed for 3, 5, 10 or more years. And you just can’t sell out… at least not without a huge penalty.

Another way to get in the game is to invest in a publicly traded limited partnership. LPs are available in all colors and flavors. Ownership shares trade on the stock exchange, so you can get in and out of the investment pretty easily. With LPs, however, the tax reporting can be onerous. Those “dividends” you receive are really return of capital against your share of earnings. Lots of moving parts to keep track of, which a good tax advisor ought to be able to handle… for a price.

Our go-to real estate investment is the REIT (pronounced ‘Reet’), or Real Estate Investment Trust. Congress created REITs in the 1960’s to make large-scale, income-producing real estate investments accessible to small investors. REITs trade like a stock. Unlike TICs or hedge funds, investors don’t need to commit large amounts of cash and can sell their shares at any time. REITs typically pay out all of their taxable income as dividends to shareholders who, in turn, pay income taxes on those dividends—much simpler than the headache of complex LP taxes. The best part is, REITs provide all types of investors with stable income streams, diversification, and long-term capital appreciation.

(Some REITs include Simon Property Group, American Tower, Public Storage, Equity Residential and Crown Castle Intl*, or you can get full sector exposure through a REIT Exchange-Traded Fund such as Vanguard’s REIT ETF (VNQ). For more information, check out*

*Source: S&P Real Estate Sector Fund (XLRE) Top 5 Holdings by Weight as of 1/20/2016. For example only - not intended as a recommendation.

NOTE: Maxwell Noll Investment Advisors is a fee-only advisor. Investment recommendations will be made only after a thorough review of current assets and risk tolerance, and a management agreement has been executed. Please refer to Form ADV-2 for fee structure and other important information.