Real Estate Investment Trust or REIT as it’s most commonly known!
Real estate is big business and everyone seems to trust and want to invest in real estate. You keep hearing stories out there about how people can make quick money by investing in real estate. There are stories about people who have made $50,000 in a fortnight by making the right kind of investment in real estate. Every now and then, newspapers keep showing and coming up with statistics about how much real estate prices have appreciated. There seems to be a mad rush to invest in real estate, which turns into a frenzy when mortgage interest rates start falling. However, not everyone has the time, money and expertise to be able to profitably invest in real estate.
So what does one do? Is there any other option?
Yes, there is definitely another way of investing in real estate and that is through Real Estate Investment Trust. Real Estate Investment Trust is an organisation that invests in real estate as part of a full fledged real estate business. By investing in a Real Estate Investment Trust, you can become part of the real estate investment group and or party and enjoy the profits, of course, we are making the assumption that the Real Estate Investment Trust you picked is good and professionally managed.
Real Estate Investment Trust investing is pretty easy as well. You can just buy Real Estate Investment Trust shares which trade on all major exchanges. There are certain laws governing the Real Estate Investment Trusts that help them avoid the high tax rates at the corporate level e.g. it is mandated that Real Estate Investment Trust’s portfolio has 75 percent of investment in real estate. Moreover, 75% of the income of Real Estate Investment Trust must be from rents and or mortgage interest. There are various types of Real Estate Investment Trusts. Some Real Estate Investment Trusts own properties themselves and so their revenues and earnings come mostly from rental properties. Some other REIT only provide the mortgage loans or mortgage backed securities. Then there are Real Estate Investment Trusts which do both i.e. rental properties and mortgage based investments.
There are many Real Estate Investment Trusts available and operating in the market and a lot of these Real Estate Investment Trusts are doing good business. By investing in Real Estate Investment Trust you are basically investing in real estate without actually buying a property yourself. This is one of the easiest way to invest in real estate where you do not own the property and it usually is a much safer investment. You should definitely evaluate this option if you are looking to invest in real estate.