WHAT IS A REAL ESTATE INVESTMENT TRUST (REIT)?
A Real Estate Investment Trust (REIT) offers a way to own income-producing investment properties without the operational responsibilities typically associated with real estate ownership.
Here’s a detailed explanation of how REITs work and their benefits:
WHAT IS A REIT?
A REIT is a third party that owns, operates, or finances a piece of real estate. Just like investing in a business, investors can purchase shares in a REIT, which allows them to become real estate investors without the responsibility of property ownership.
TYPES OF REITs
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Equity REITs - These are owned and operated income-generating properties, like apartments or condos. Investors collect income by leasing the space and collecting rent on the properties they own.
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Mortgage REITs (mREITs) - These REITs provide financing for income-producing real estate by purchasing or originating mortgages and mortgage-backed securities. Their income primarily comes from the interest on these financial instruments.
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Hybrid REITs - As guessed, these combine the strategies of both equity and mREITs, owning and holding mortgages.
BENEFITS OF REAL ESTATE INVESTMENT TRUSTS (REITs)
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Passive Income
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Diversivfication
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Liquidity
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Professional Management
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Access to Commercial Real Estate
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Potential for Capital Appreciation
