What is a REIT?

Today’s tip will cover “What is a REIT?

A REIT, also known as a Real Estate Investment Trust is a company that owns, operates or finances income-producing real estate.  You can invest in REITs either by purchasing shares directly on an open exchange or by investing in a mutual fund that specializes in public real estate. There are several REIT ETFs available too.

Some REITs are registered with the SEC known as the U.S. Securities and Exchange Commission and public, but not listed on an exchange; while others are private.

Many REITs will invest specifically in one area of real estate such as shopping malls, healthcare or office REITs for example. Or in one specific region, state or country. There are Equity REITS, Mortgage REITS, Public Non-listed REITS and Private REITS.

Most REITs typically pay out a dividend to their shareholders.   They must distribute at least 90% of the portfolio’s income to its shareholder in the form of dividends.

Catherine Magaña is a CFP® or CERTIFIED FINANCIAL PLANNER TM in Carlsbad California.

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