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Zhi Finance » Real Estate Investment Trusts. Enabling you to be part of the party

Real Estate Investment Trusts. Enabling you to be part of the party

Real estate is a big business and everyone seems to want to invest in it. You hear a lot of stories constantly about how people are making fast money by investing in real estate. There are stories about people who made $50,000 in two weeks by making the right investments in real estate. Every once in a while, statistics appear in the newspapers about the appreciation of real estate prices. There seems to be a frenzied craze to invest in real estate (which gets bigger when mortgage rates go down). However, not everyone has the time, money and expertise to make a profitable real estate investment. So, what should people do? Are there other options?

Yes, there is another way to invest in real estate, and that is through a real estate investment trust. A REIT is an organization that invests in real estate as a complete business. By investing in a REIT, you can become part of the real estate investor and enjoy the profits (assuming, of course, that the REIT is well and professionally managed).

Investing in REITs is also very easy. You just need to buy REIT shares that are traded on all major exchanges. There are laws governing REITs that help them avoid corporate level taxes, for example, requiring that 75% of a REIT’s portfolio be invested in real estate. In addition, 75% of the REIT’s income must come from rent or mortgage interest. There are various types of REITs. Some REITs own their own properties and therefore live off the rental income from these properties. Others indulge in mortgage-only lending or go on to buy mortgage-backed securities. Still other REITs do both, i.e., rental-focused investments and mortgage-based investments.

There are many REITs operating in the market and many of these REITs have good businesses. By investing in a REIT, you are essentially investing in real estate without actually buying the property yourself. This is an easy (and safer) way to invest in real estate. You should definitely evaluate this option for your real estate investment.