There are different ways you can make money within the realm of real estate investing. One option is to buy physical properties, rent them out, maintain them, and let them appreciate in value. You can also buy homes in disrepair, fix them up, and flip them at a profit.
But if you'd rather take a more hands-off approach to real estate investing, you may prefer to put money into REITs instead. REITs, or real estate investment trusts, are companies that derive revenue from their portfolios of properties. And here are three REITs that could really take off in 2022.
1. Public Storage
The need for self-storage has been amplified in the wake of the pandemic. Over the past two years, living arrangements have changed, and work setups have shifted. In fact, the number of people working remotely has created an increased need for at-home space. And that's where self-storage comes in.
One leader within the self-storage sector is Public Storage (PSA 0.26%). With facilities across the U.S. and Europe, Public Storage enjoyed significant growth in 2021 and is poised to build on consumer demand in 2022.
For the three-month period ended Dec. 31, 2021, Public Storage saw its core funds from operations increase 20.8% compared to the same period in 2020. The company also acquired 232 self-storage facilities with 21.8 million net rentable square feet.
The pandemic has changed the way a lot of consumers do their shopping. Over the past two years, digital sales have exploded. Consumers are ordering everything from apparel to groceries to medications online, and e-commerce is so big right now that the demand for warehousing space has begun to exceed the available supply.
That puts companies like Prologis (PLD 0.76%) in a solid position for 2022. As more and more retailers ramp up their e-commerce platforms, Prologis should have no problem drumming up business.
In its most recent earnings report, the company projected an average occupancy rate of 96.5% to 97.5% across its global facilities in 2022. And as the largest player within the industrial space, the company is in a prime spot to capitalize on what will likely be a permanent shift in the way consumers purchase goods.
3. Digital Realty Trust
While it's fair to say that the world was going digital before the pandemic, the events of the past two years have fueled that trend. The rise of e-commerce is only going to lead to a greater need for data centers. And with more and more people permanently working remotely or entering into hybrid work arrangements, data center space is likely to come at a premium. That puts Digital Realty Trust (DLR 0.58%), one of the largest players within the data center sector, in a solid growth position for 2022.
During the company's fourth fiscal quarter of 2021, Digital Realty signed bookings expected to generate $156 million in revenue and signed $151 million worth of renewal leases. All told, the company generated over $500 million of new business in 2021, and that momentum could continue as data center demand explodes.
Sit back and profit
The beauty of owning REITs is getting to enjoy a steady stream of passive income without having to lift a finger. That's because REITs commonly pay larger-than-average dividends. These three REITs could reward investors generously in 2022 and beyond, so it may be worth carving out space for them in your portfolio.