Investing in income-generating real property can be considered a smart way to boost your net worth. But also for many people, investing in real estate, commercial real estate particularly, is merely out of reach economically. But what if you could pool your resources with other small investors and invest in large-scale commercial real estate as an organization? REITs (pronounced like “treats”) enable you to do just that.
REIT means real estate investment trust and is sometimes called “real estate stock.” Essentially, REITs are corporations that own and manage a portfolio of real estate properties and home loans. Anyone can purchase stocks in a traded REIT publicly. They offer the advantages of real estate ownership without the headaches or expense of being a landlord.
Investing in some types of REITs also provides the important benefits of liquidity and variety. Unlike actual real estate property, these shares can be and easily sold quickly. And because you’re purchasing a portfolio of properties rather than single building, you face less financial risk. REITs arrived in 1960 about, when Congress made a decision that smaller investors should be able to spend money on large-scale also, income-producing real property. It established that the best way to do that was the follow the style of buying other sectors — the purchase of equity.
A company must deliver at least 90 percent of its taxable income to its shareholders each year to qualify as a REIT. Most REITs pay out 100 percent of their taxable income. To be …
