Real estate investment trusts (REITs) are unique types of firms that permit investors to fund their cash in real estate properties. Some of these firms purchase assets and rent them out to tenants. Others choose to establish properties or concentrate on the mortgage side of the real estate business. So, you can think of the business as the mutual finance for the real estate.
Hence, narrow to down the following details to understand more about REITs.
How Organization Become Part of REIT
It is prudent to know that companies can purchase some assets from real estate business and term themselves as REITs. Moreover, they will have to meet specific requirements, such as the following:
- Must invest in 75% of the real estate properties
- Must pay 90% of the taxable income
- Must be structured as the corporations
Types of REITs
There are a few types of real estate investment trusts. They are categorized depending on the kind of enterprise they concentrate on. Moreover, the classifications also rely on the shares sold and bought in the market. Some of these types are mortgage, equity, private, and publicly traded REITs. Other types are hybrid and public non-traded.
Pros of Making an Investment
REITs play vital when it comes to investment portfolios. They are easy to purchase and sell because of the public exchanges. This feature reduces the drawback of the real estate business. Remember, dividends from the REIT holdings are subjects of fluctuations. So, like other investments, businesses that take part in REITs enjoy various benefits, such as the following:
- Steady dividends
REITs may be perfect additions for your portfolio. They produce steady income and growth that translates into impressive and long-term returns. So, you should not hesitate to make an investment to enjoy benefits such as transparency and liquidity, among others.