REIT - Real Estate Investment TrustBusiness in the current situation is dominated by the real estate business. Real estate business has popularized the term of business to a complete new section of the population who are enjoying the advantages promised by the real estate companies. This is one of the main reasons that has made investing in the real estate market a highly desired activity amongst individuals. Investing in real estate has paved the way for REIT real estate investment trusts. One of the primary areas of Real Estate Investment Trust or REIT is a corporation or trust that utilizes the pool of capital accumulated by many investors to manage income property and mortgage loans. Nothing but a tax designation, a REIT eliminates corporate income taxes. Just as mutual funds provide for investments in stocks, real estate investment trusts are made with a structure to offer for investing in real estate properties. Income property is nothing but real estate developed or purchased for the purpose of generation of income. Equity REIT applies to income property where the trust attains the position of an owner in the investments made on real estate. On the other hand mortgage REIT applies to mortgage loans. As per common knowledge, mortgage loans are loans that can finance the purchase of real estate and naturally REITs that invest in mortgages are known as mortgage REITs. Besides these two types there is also a third type known as hybrid REIT. These trusts are more elastic in nature and can not only own property but also provide loans to real estate owners. The idea about REIT Real estate investment trusts were conceptualized by the US Congress and came into being in 1960. The best part about these trusts is that they allow you to invest in property without having to face the hassles so commonly attached to owning actual brick and mortar. The flexibility that real estate investment trusts exercise is amazing since, by definition, the industry deals with all kinds of economically viable property under the sun- industrial buildings, cinemas, shop malls, golf courses, even prisons and all you could ever think of. Anyone investing in a REIT or other real estate companies can get great returns from property without having to give much thought and time to individual rental income. While some trusts invest in buildings that can consequently be leased out and the returns will pour into the trust, others even finance the construction of real estate. Real estate investment trusts can either be public or private in nature. Most REITs are publicly owned and are equity trusts traded on stock exchanges. Around 10% are mortgage REITs that provide finance to purchasers of real estate and obtain securities backed by mortgages. Certain hedging strategies are employed by these trusts to protect against the risk of interest rate fluctuations. Even though you might be able to find striking similarities between real estate investment trusts and limited partnerships, truth is they also differ in several ways. The two most important differences are reporting the annual tax information to the investors and existence of no minimum amount of investment. In order to become a real estate investment trust, a company has to meet certain requirements. The primary necessity is that the company needs to divide 90% of its profits amongst its investors once in a year and there has to be a minimum number of deals annually. As soon as the company can establish itself as a real estate investment trust, it can legally reduce the dividends it pays to its shareholders. You can find out more information on the Internet. You will see many REITs listed there. But be specific in your searches. The REIT rules for UK are different from those for the US. A Real Estate Investment Trust is a great way to getting started in real estate investing. So do your research and go for it! |