What is a REIT? Should I Invest in a Real Estate Investment Trust?

A Real Estate Invest Trust, or REIT, is a popular investment option for people looking to get into the real estate market without buying an investment property outright. Today I share a little bit more about how they work in a video blog post.

Full Transcript

Eric Rosenberg: Hi, everyone! I’m here today to talk to you about Real Estate Investment Trust. They’re also known as REIT. You can see it spelled out, R-E-I-T. when you search online. So a little bit about a REIT and why you might want them in your portfolio for your investing.
Let’s start out by talking about what a REIT is. So a REIT trades on the stock market, like any other stock or public company It has a ticker symbol. It has a name; every REIT has a name. But unlike a company they have different regulations. They don’t run exactly like a company.
A REIT owns a group of properties. Some REITs are totally general. They might buy up all different types of properties like apartment buildings, or shopping entres, or office buildings, or even golf courses. They can own any type of physical real property.
Others are more focused. You might find one that invests only in retirement homes or only in apartment communities. So they can be focused or very general.
But there’s two main types. The first type is called an Equity Real Estate Investment Trust, which is what I just talked about – where they own properties. The second is called a Mortgage Real Estate Investment Trust, where they invest in mortgages or bundles of mortgages. They give out loans and they make money from the interest on those loans.
I really like Equity Real Estate Investment Trusts, the ones that own the properties and apartment buildings and whatnot. Because those types of REITs make their money from rents. So it’s like when you wanted to buy an apartment building as an investment for yourself, but you don’t have the money to buy an apartment building you can buy shares of a REIT that owns apartment buildings. And you have instantly diversified your risk and your revenue that you bring in comes from the rents that the tenants pay.
Real Estate Investment Trusts have certain regulations that say they have to pay out a certain percent of the revenue they bring and they can’t keep it. If I remember right, I think it’s 95% of all revenues they bring in. They have to pay out to you, the investor, your dividends.
So if you want to invest in real estate but don’t have the money to buy investment properties, look at a REIT. It could be a great part if your portfolio. It is a part of mine. And for the long term and the short term, I think we’re gonna see great things in the REIT industry.
So if you have any questions send me an email, comment on a blog post around this video and I will talk to you guys later.
Thanks. Have a great day.

Scroll to Top