From what a REIT is to how it invests, here’s how to make money from these real estate vehicles.<\/p>\n\n\n\n
US News.com | By\u00a0Paulina Likos<\/a>\u00a0and\u00a0Coryanne Hicks<\/a> | May 18, 2021, at 4:17 p.m. | REITs<\/a><\/p>\n\n\n\n A real estate investment trust, or\u00a0REIT<\/a>, is a company that owns, operates or finances income-producing real estate.<\/a><\/p>\n\n\n\n This is often done by pooling investors’ money to buy and possibly manage\u00a0commercial<\/a>\u00a0or residential buildings. The company then collects rent from its tenants and passes that income onto investors in the form of high dividends.<\/p>\n\n\n\n “REITs are publicly traded companies that exist purely to own real estate or real estate-related assets and allow investors exposure to real estate,” says Jeff Saul, co-CEO and co-founder at Nativ based in New York City. “You can think of a REIT as analogous to an (exchange-traded fund) in the stock world \u2013 this is a basket of diversified real estate assets (could be loans or direct equity investments) that is actively managed by qualified real estate investment managers.”<\/p>\n\n\n\n As\u00a0REIT shareholders<\/a>, investors get exposure to real estate without the headaches of owning, operating or directly financing properties.<\/p>\n\n\n\n There are two broad categories of real estate investment trusts:\u00a0equity REITs<\/a>\u00a0and mortgage REITs, or mREITs. Most REITs are equity REITs, which own or operate income-producing real estate such as apartment buildings, offices or shopping centers.<\/p>\n\n\n\n Each advisor has been vetted by SmartAsset and is legally bound to act in your best interests. If you\u2019re ready to be matched with local advisors that will help you achieve your financial goals,\u00a0get started now.<\/a><\/p>\n\n\n\n Equity REITs typically invest in a particular type of property. For example, retail REITs invest in shopping centers, while residential REITs invest in apartment complexes, single-family homes and even student housing. There are other types of equity REITs, too, such as:<\/p>\n\n\n\n If a REIT invests in a mix of property types, it’s called a diversified REIT. If the properties it owns and manages don’t fit into any other category, it’s called a specialty REIT. Examples of specialty REITs include Lamar Advertising Co. (ticker: LAMR<\/a>), an advertising real estate provider, and Gladstone Land Corp. (LAND<\/a>), a REIT investing in the agricultural market, leasing land to farmers.<\/p>\n\n\n\n Mortgage REITs finance commercial and residential properties by investing in mortgages and mortgage-backed securities. These can be agency mortgages secured by Fannie Mae, Freddie Mac or Ginnie Mae, nonagency mortgages or commercial mortgages. Mortgage REITs typically specialize in either commercial or residential mortgages but some invest in both.<\/p>\n\n\n\n These REITs borrow money to buy mortgages paying a higher interest rate. The difference between the rate the REIT pays lenders and the one it receives from investments, called the interest rate spread, is how it generates income and ultimately pays dividends for investors.<\/p>\n\n\n\n Click here for the full story…<\/a><\/p>\n\n\n\n A real estate investment trust, or\u00a0REIT, is a company that owns, operates or finances income-producing real estate.<\/p>\n","protected":false},"author":2,"featured_media":12199,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,342,1,348,2],"tags":[15,31,71,2173,2172],"class_list":["post-12198","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-blog","category-home-insurance","category-insurance","category-renters-insurance","category-shield-blog","tag-business","tag-commercial-insurance","tag-michigan","tag-real-estate-investments","tag-reits"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\tThe Ultimate Guide to REITs<\/h2>\n\n\n\n
Types of REIT<\/h3>\n\n\n\n
How a REIT Works<\/h3>\n\n\n\n
\n\n\n\nMore great articles from the Shield Insurance Agency Blog<\/h2>\n\n\n