Real Estate Investment Trust FundsMany people want to find out how to get started in real estate investing. Investing in real estate is a dominant trend of the modern day societies. However in the past few turns the pattern of investing in real estate has limited itself to the trust funds. Real estate investment trust funds or REIT funds are a kind of security that are sold in most of the exchanges, and provides the investors an opportunity for direct real estate investment. Real Estate Investment Trust is a tax designation that is applied to a company which invests a bulk of its shares into real estates. The advantages with investing in REIT funds lie in the fact that they get a lot of tax considerations and therefore, offer the investors with huge benefits on their investments. This is a good commercial strategy too, which helps companies with proper management of their assets and financing. The trust fund companies have capitalized highly on such a flourishing scenario. In fact the competition growing between the trust fund companies can only provide further impetus to the rising scales of real estate investors. There is a group of Real estate investment trust funds that are available in the market, these include: Mortgage REITs: Most of the Mortgage REITs primarily deal in the investment and ownership of property mortgages, most of these REITs start out by loaning money to the property owners in terms of mortgages, they can even buy a mortgage that has been backed by securities. The principle source of income of these REITs is through the interest that is generated by the interests that they earn as premiums from these mortgage loans. Equity REITs: all the Equity REITs work almost in the same way, these REITs invest and own properties. These REITs derive the bulk of their revenues from the rent that is generated from their properties. They offer a secure and sure way to get more out of the investments that no other mutual fund can offer. Hybrid REITs: the Hybrid REITs are a kind of Real Estate Investment Trust that combines the benefits of both the Equity REITs and the Mortgage REITs as they invest in both mortgages and properties so that the investor gets the best of both the worlds. There are certain rules and regulations to which a firm must conform to before being certified as a REIT. These rules are provided below: - First of all the company should be structured as a corporation, or a trust or maybe an association. - The firm should be managed by a board of directors, and the firm should not be financial institution or an insurance company. - The firm should have a minimum of 100 shareholders, who will jointly own the firm. - 50% of the shares of the firm should be owned by not more than five individuals, and this must be the trend during the last halves of each taxable year. - 75% or more of the total investment of the firm should be in real estate. - The firm should also derive 95% of its taxable income from dividends, property incomes and interest from the mortgages. - One of the very important criteria that is required to become a REIT is that the company should shell out 90% of its taxable income each year as dividends to its share holders. A REIT is not allowed to retain more than 10% of their taxable income each year. REITs are great way to invest money; these funds are more reliable than the mutual funds and provide a long term source of income for the investors. REITs are currently one of the most popular source of income for the real estate investors who want to cash in on the real estate boom. It can be clearly seen why these trusts are coming out in greater favor with the investors than banking. |