What is a REIT?...you may ask. REIT stands for Real Estate Investment Trust. Defined as a corporation or trust that uses the pooled capital of many investors to purchase and manage income property (equity REIT) and/or mortgage loans (mortgage REIT). REITs are traded on major exchanges just like stocks. They are also granted special tax considerations.
Advantages:
1) Liquidity... unlike traditional real estate, REITs can be bought and sold like stock.
2) Most REITs pay dividends quarterly. A well run REIT can provide consistent income without having to lift a finger. This is perfect for the investor who doesn't have the time to manage his or her own property.
3) REITs offer ownership in not only residential property but other real estate such as malls, hotels, commercial and industrial property.
4) Like stocks, REITs value can increase substantially.
5) Buying REIT shares/units requires far less capital than traditional real estate.
Disadvantages:
1) Like stocks, REITS value can decrease substantially.
Saturday, July 28, 2007
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