Real Estate Network

Posts Tagged ‘Trusts’

REIT properties can include investing in properties such as shopping malls, apartments, office buildings, hotels, hospitals, student housing, and warehouses. REITs offer investors high yields which provides consistent income as well as a liquid method for investing in real estate.

CHOICES

Equity REITs: are investment and ownership of properties. Revenues are generated primarily from property rentals.

Mortgage REITs: is the investment and ownership of property mortgages. Revenues are generated primarily from interest earned on the mortgage loans.

Hybrid REITs: include investing in both Equity REITS and Mortgage REITS.

BENEFITS

REITS are not taxed at the corporate level. Therefore, 90% or more of the taxable income must be passed to shareholders.

REIT investments increase in value as the real estate appreciates in value and the share price may rise which increases the value of the investment.

REIT investments offer long-term income streams due to long-term lease agreements with tenants

REIT investments are considered a liquid asset because they trade like stocks and are easier to get into and out of, unlike other forms of real estate investment and ownership.

REIT investments offer investors the opportunity to invest in multiple real estate sectors. For example, if you are a REIT investor with properties in the commercial development industry, should there be a downturn in the economy, if you are an investor in multiple sectors, you can still benefit from other areas such as Retail REITs.

REIT investors become property owners and partial owners of an operating business. REIT properties are managed by hired management teams. This removes the investor from managing operational details such as marketing, rent collection, tenant management, and property maintenance. REIT investors collect their dividends without the headache of property management.

TYPES

Healthcare: primary property holdings include senior housing, hospitals, assisted-living facilities, or medical office buildings.

Hotel/Motel: primary property holdings include hotels, motels, resorts, or lodging.

Industrial: commercial industrial facilities and multi-tenant industrial facilities.

Office: primary property holdings include commercial office properties and office buildings.

Residential: primary property holdings include apartments, multi-family housing, or student housing.

Retail: primary property holdings include regional malls, shopping centers, or strip malls.

Mortgage: primary holdings include loan portfolios that specialize in underwriting, acquiring and holding debt obligations guaranteed by real estate properties.

Hybrid: primary holdings include both equity and mortgage investments.

Real Estate Investing in REITs offers a more diversified investment option for both new and seasoned investors. REIT investors are not limited to geographical locations, property type, or minimum investment.

Real estate is a big business and everyone seems to want to invest in real estate. You keep hearing a lot of stories about how people made a quick buck by investing in real estate. There are stories about people who made $50000 in a fortnight by making the right kind of investment in real estate. Every now and then, newspapers keep coming up with statistics about the appreciation in the real estate prices. There seems a mad rush for investing in real estate (and this gets even bigger when the mortgage interest rates are falling). However, not everyone has the time, money and expertise to be able to profitably invest in real estate. So what does one do? Is there any other option?

Yes, there is another way of investing in real estate and that is through Real Estate Investment Trust. Real Estate Investment Trust is an organisation that invests in real estate as a full fledged business. By investing in a Real Estate Investment Trust, you can become part of the real estate investment party and enjoy profits (of course, the assumption here is that the Real Estate Investment Trust is good and professionally managed).

Investing in Real Estate Investment Trust is very easy too. You can just buy Real Estate Investment Trust shares which trade on all major exchanges. There are certain laws governing the Real Estate Investment Trusts that help them avoiding the tax at corporate levels e.g. it is mandated that Real Estate Investment Trust’s portfolio has 75 percent of investment in real estate. Moreover, 75% of the income of Real Estate Investment Trust must be from rents or mortgage interest. There are various types of Real Estate Investment Trusts. Some Real Estate Investment Trusts own properties themselves and hence feed on the rental income from those properties. Some others indulge in providing only mortgage loans or go for mortgage backed securities. Then there are Real Estate Investment Trusts which do both i.e. rental focussed investments and mortgage based investments.

There are a number of Real Estate Investment Trusts operating in the market and a lot of these Real Estate Investment Trusts are doing good business. By investing in Real Estate Investment Trust you are basically investing in real estate without actually buying a property yourself. This is one easy way of investing in real estate (and much safer too). You must surely evaluate this option for your real estate investments.