Real estate investment trusts
Real estate investment trusts are entities that invest in different kinds of real estate like shopping centers, office buildings, mortgage that are secured by real estate. Equity real estate investment trusts most common type invests in own real estate and make money for investors from rent. Mortgage real estate investment trusts lend money to owners and developers secured on mortgages real estate. Hybrid REITS are a combination of both. Individuals can invest in REITS either by purchasing their shares on an open exchange or by investing in a mutual fund.
REITS may focus their investment geographically or in property types. Both domestic and foreign sources provide investment in the real estate investment market. REITS are owed by thousands of individuals and investors like insurance companies, pension funds, endowment funds and bank trust departments. Real estate investment trusts and their performance have some common features such as stocks and bond investments.
The origin of the real estate investment trust also known as REIT date back to eighteenth century. At that time investors could avoid double taxation since trusts were not taxed at the corporate level if the income was distributed to beneficiaries. Unlike the stock and bond investment firms, REITS were unable to secure legislation to overcome the 1930's decision.
Equity REITS companies invest in actual properties and mortgage REITS invest in mortgage backed securities. When considering real estate investment trusts investments to diversify your portfolio, you should know the availability of a REIT in which you are interested and goal of your interest. A REIT is a tax designation for a corporation investing in real estate reducing corporate income taxes. Real estate investment market was created by US congress in 1960.
Like every other company, REIT can be publicly or privately held in which publicly held REIT listed on stock exchanges of public. Real estate investment trusts offer many advantages to those people who do not have sufficient money to invest in real estate. These trusts can offer you regular dividends when the trust use your money to buy property and you may also gain when the share price of company enhance.
As REIT has to doll out ninety percent of its taxable profit as dividends to its shareholders, they are signified as high yield instruments similar to small stocks generating returns from dividends. Well known REITS companies in the America are Washington real estate investment trust and PRIT and National association of real estate investment trusts. Real estate investment trust especially popular in Japan, Singapore, Canada and it was first listed in the (AXE) Australian Stock Exchange in 1970s. India is yet to allow set up the REIT and associated chambers of commerce has mooted the idea with the government to expand the real estate market and provide benefits to property investors.
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