REIT stands for Real Estate Investment Company and basically functions like an Investment Trust. It functions as a company not only owns but also manages income generating properties, either residential or business-related, and is intended to provide the investors with income from rented assets.
REITs receive unique tax considerations and usually provide their investors with heavy yielding income as well as easy techniques of investing in real estate.
REIT investment has quite a lot of reimbursements over investing in real estate on your own. Just as, if you purchase a property, be it personal or commercial, managing the property, lease, maintenance, renters, would all fall on your shoulders. As a matter of fact, purchasing a property on your own directly leaves the invested sum of money as not very flexible, i.e. if due to some emergency you need to sell off that property and willing to collect the cash on the very second day, you will not be able to do it.
A substitute to this process is REIT. It is incredibly flexible where you can easily sell your property or shares and collect your own money the very second day.
There are majorly three types of REIT’s that can be found in the market. These are mortgage REIT’s, equity REIT’s and hybrid REIT’s.
A mortgage REIT deals with loaning money to the real estate owners or buying estate that already exists. The main source of earning here is the interest charged on the loan.
An equity REIT is one where the company owns properties where the worth is in the form of equity of that particular property and the company then receives payment as a source of its profits.
Going just by how the name sounds, a hybrid REIT is basically an amalgamation of both mortgage and equity. Basically, investments in properties as well as mortgages.
If you are in search of finances that act as extra income, REIT just might be the thing you need with its high dividend paying quality.