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Suppose Amy wants to invest in real estate and is considering two different residential properties. Based on the expected incomes and operating expenses of each,
Suppose Amy wants to invest in real estate and is considering two different residential properties. Based on the expected incomes and operating expenses of each, she estimates that the first property (property A) has an NOI of $42,000 and that the other (property B) has an NOI of $31,000. If the cap rate is 9%, property A has an estimated value of $ and property B has an estimated value of In deciding between these two properties, it is important for Amy to consider other factors. If she is a first-time investor, she is probably better off investing in property. Alternatively, Amy might want to consider investing in a real estate investment trust (REIT), a type of investment company that operates similarly to mutual fund. Which of the following statements regarding REITs are true? Check all that apply. They allow individuals to buy shares in a real estate-based stock portfolio. The value of REITs tends to move in the same direction as the general stock market. They can increase the diversification of individuals who are already invested in the stock market. They pay dividends
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