A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing real estate properties. REITs pool money from multiple investors to purchase, manage, and often develop real estate properties. These properties can include commercial office buildings, apartments, hotels, retail spaces, warehouses, and more.
One of the primary benefits of investing in a REIT is that it provides investors with exposure to the real estate market without having to own and manage the properties themselves. REITs are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends, which can provide a steady stream of income for investors. Additionally, REITs are often publicly traded on major stock exchanges, which means that investors can buy and sell shares of the REIT like they would with any other publicly traded company.
REITs come in several different forms, including equity REITs, mortgage REITs, and hybrid REITs. Equity REITs own and operate income-producing real estate properties, while mortgage REITs invest in mortgages and other real estate debt instruments. Hybrid REITs have a combination of equity and mortgage investments.
It's important to note that investing in REITs carries risks, including fluctuations in real estate prices, interest rates, and economic conditions. Investors should carefully consider the risks and potential rewards before investing in a REIT.