What is a Real Estate Investment Trust (REIT)?

Описание: Do you want to invest in those giant income-generating properties like skyscrapers, hospitals, or apartment complexes but think you need millions? Think again! This essential explainer breaks down real estate investment trusts (REITs), the clever company structure created specifically to allow regular investors to access commercial real estate. We dive into how these special companies pull money from a whole bunch of investors to buy big-time properties. It’s essentially like a mutual fund, but instead of buying a basket of stocks, you’re buying a basket of real estate investment trusts.

The concept of the real estate investment trust was actually created by the US Congress way back in 1960. The whole point was to open up commercial real estate to everybody, giving regular investors a shot at a market that was previously a private club for the super rich. We are talking about real, physical places—apartment buildings, malls, hospitals, and hotels—the properties that form the backbone of our economy.

The absolute key to their structure is the powerful 90% rule. By law, REITs have to pay out at least 90% of their taxable income to us, the shareholders, as dividends. This rule means you can receive a steady stream of income. In return for this high payout, the real estate investment trust itself gets a huge tax advantage: it basically gets to skip paying corporate income tax.

We explore the different types of REITs: Equity REITs (the landlords who own the actual physical buildings and collect rent) and Mortgage REITs (the bankers who own the loans on the property and make money from the interest). While they offer advantages like liquidity—it’s easier to sell a share of a REIT than an entire shopping mall—they are not risk-free and can fluctuate just like any other stock since most trade on the stock market. Understanding real estate investment trusts is essential, as they play a huge role in the wider economy by funding and managing the places we use every day, including our hospitals and offices.

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📚 Table of Contents (Navigate the Real Estate Investment Trusts Guide)
00:00 - Introduction & Why Real Estate Investment Trusts Exist 01:15 - The History: When & Why Congress Created REITs 02:40 - The Magic 90% Payout Rule Explained 04:50 - Equity REITs vs. Mortgage REITs (The Different Flavors) 06:30 - Pros and Cons: Dividends, Liquidity, and Risk 08:05 - The Huge Economic Role of REITs in Our Communities


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