Real Estate Investment Trust: Enabling you to be a part of the party
Real estate is a big business and everyone seems to want to invest in this business. 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 $50,000 in a fortnight by making the right kind of investment. 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 (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 to make such investments. So what does one do? Is there any other option?
Yes, there is another way of investing in this business and that is through Real Estate Investment Trust. This organisation invests in real estate as a full fledged business. By investing with them, you can become part of the real estate investment party and enjoy profits (of course, the assumption here is that they are good and professionally managed).
Investing in Real Estate Investment Trust is very easy too. You can just buy 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 Trust’s portfolio has 75% of investment in real estate. Moreover, 75% of the income of Trust must be from rents or mortgage interest.
There are various types of Real Estate Investment Trusts. Some of them 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 some other which do both i.e. rental focussed investments and mortgage based investments.
Most of them are operating in the market and 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 future investments.