A Real Estate Investment Trust (REIT) is a type of investment vehicle that invests in income-generating real estate properties. REITs are similar to mutual funds, but instead of investing in stocks and bonds, they invest in real estate properties such as commercial buildings, apartments, and shopping centers.
REITs offer investors an opportunity to invest in real estate without having to buy and manage properties themselves. REITs pool the funds from multiple investors and use the capital to purchase and manage real estate properties. The income generated from these properties is distributed to investors in the form of dividends.
REITs are required to distribute at least 90% of their taxable income to shareholders in the form of dividends. This makes REITs an attractive investment option for income-seeking investors, as they offer a steady stream of income in the form of dividends.
There are two main types of REITs: equity REITs and mortgage REITs. Equity REITs invest in income-generating properties and generate income from rents, while mortgage REITs invest in mortgages and earn income from interest payments.
REITs are traded on stock exchanges, making them easy to buy and sell like stocks. They are also required to meet specific regulatory requirements and are overseen by the Securities and Exchange Commission (SEC).