What is a Real Estate Investment Trust (REIT)?
1.5 min read
Investing in a real estate investment trust, otherwise known as a REIT, is typically the safest bet for anyone interested in commercial real estate. So, what is a REIT, anyways? A REIT is a company that owns, operates, or finances income-generating commercial real estate.
Real estate investment trusts are modelled after mutual funds, as both collect capital from numerous investors—making it possible for investors to earn dividends on their investments. REITs typically invest in a diverse range of properties – including residential buildings, healthcare facilities, hotels, offices, and retail centres, to name a few. However, it is not uncommon for some REITs to only focus on a specific sector. Real estate investment trusts are typically publicly traded on the stock market, allowing investors to buy and sell stocks as they see fit. REITs often appeal to investors as they offer stable cash flow with little risk.
Investing in a company that purchases, manages, and operates commercial properties, there is often less risk than if you were to purchase the property outright. Investing in a REIT with a diverse portfolio is essential, as this will likely increase your investment earnings. This is a great way to increase your portfolio diversification and dividend-based income.
Reference
Chen, J. (2023, January 12). Real Estate Investment Trust (REIT): How they work and how to invest. Investopedia. Retrieved January 30, 2023, from https://www.investopedia.com/terms/r/reit.asp
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