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A Complete Guide To Mortgage REIT Investing – By Goldstone Financial Group

Guide To Mortgage REIT Investing

Investing in Mortgage Real Estate Investment Trusts (REITs) can be a great option for those seeking to diversify their portfolios and manage the risk inherent in traditional investments. REITs are an investment vehicle that allows individuals to purchase shares and invest in mortgages of real estate properties without actually having to buy or own them directly. With potential rewards like increased cash flow, protection from market volatility, tax benefits, and higher yields than stocks or bonds, it’s no wonder Mortgage REIT investing has grown popular over the past few years. But how do you get started? This guide by Goldstone Financial Group provides a comprehensive overview of what Mortgage REIT investing is all about so you can make informed decisions on whether this strategy works best for your financial goals.

Goldstone Financial Group’s Guide To Mortgage REIT Investing

Mortgage REITs (Real Estate Investment Trusts) are one of the most common forms of real estate investments, says Goldstone Financial Group. They have become increasingly popular in recent years due to their potential for higher returns and lower risk than other types of real estate investments. Mortgage REITs invest in mortgages that are secured by residential or commercial properties, including single-family homes, multifamily units, and commercial buildings.

A mortgage REIT purchases mortgages from lenders, collects interest payments from borrowers and earns money on the difference between what it pays for mortgages and what it earns in return from interest income. The goal is to generate a steady stream of income from these investments over time. Mortgage REITs may also engage in activities such as securitization, which involves bundling together mortgages and selling them as securities to investors.

Mortgage REITs are attractive investments due to the potential for higher returns than other types of real estate investments. They also have lower risk than most other investment options, as they usually have a portfolio diversified across different mortgages with varying characteristics. Additionally, they offer a number of tax advantages over traditional real estate investments. 

According to Goldstone Financial Group, the average return on investment (ROI) for mortgage REITs is around 8%, while the average return on equity (ROE) is around 13%. The average dividend yield for mortgage REITs is approximately 4%. Additionally, the average price-to-book ratio (P/B) for mortgage REITs is around 0.8, indicating a relatively low cost for investing in these securities. 

For example, a real estate investor buys an apartment building with ten units and finances the purchase with a mortgage he obtained from his local bank. He then sells that same mortgage to a mortgage REIT, which bundles it with other mortgages and sells them as securities. The investor earns interest income from the sale of the mortgage security and profits from the difference between what he paid for the loan and what he earned from selling it to the REIT. 

Goldstone Financial Group’s Concluding Thoughts

Mortgage REITs offer investors potential higher returns than traditional real estate investments while also providing lower levels of risk through diversification and tax advantages. According to Goldstone Financial Group, with careful research and due diligence, they can be a valuable addition to any real estate portfolio.