REITs (real estate investment trusts) are a type of company that invests in income-producing real estate. These investments provide investors with exposure to all of the properties owned by the REIT, which can generate high rates of return and provide diversification for their portfolios.

One way to invest in these companies is through buying shares on an exchange. As more people have looked towards this strategy, it has become one of the most popular investment options today. Today there are over 87 million Americans who own REIT shares, and you could be next!

Where did REITs come from?

Real estate investment trusts have come a long way since they were invented in the United States 60 years ago. These investments offer affordable ways to invest in real estate, and REITs are able to pool many different types of income-producing properties into one place much like mutual funds do with stocks.

REITs are a specific type of investment vehicle that is required to invest at least 75% of their assets in real estate-related sources and provide investors with 90% or more income from those investments. REITs offer different benefits than other types of securities, including the ability for dividends to be reinvested through company stock purchases.

Real estate can prove a valuable addition to your portfolio in many ways. Long-term returns come from appreciation and regular yields through dividends. Meanwhile, diversification is offered by REITs - an easy way for investors to invest their money without risking too much of it on one thing.

How do REITs work?

Investors can buy shares in many different ways. REITs are like mutual funds, which allow investors partial ownership in a group of assets. A REIT’s value is determined by the changes to individual properties and whether or not they turn out profitable for all owners.

Equity investments typically generate income from rental payments, whereas debt investments produce revenue through interest. If a REIT owns the property directly (equity ownership), then increases in value will impact their own worth--leading to an increase of individual shares.

When you invest in a REIT, not only do you see your investment appreciate and pay out dividends on the income that real estate properties produce, but also those dividend distributions are typically divided up equally among investors.

Meanwhile, an investor generally has to sell their REIT shares in order to realize appreciation-based returns. Income can be distributed on a regular basis. Yet, when it comes time for the profits of that income (like what you might see with capital gains) then there's usually some type of lump sum return involved.

So since this is different from any other kind of investment out there - like stocks and bonds - investors have more options available so they're not just limited by one form or another; which also means that closing investments earlier than planned because things are going well probably won't happen as often either.

The potential for both appreciation and income with real estate investments is one of the many reasons why they have been such a historically high-performing asset class. Real estate offers investors hard assets, limited in supply that are inherently imbued with intrinsic value due to their nature as an investment vehicle. Demand can lead them to appreciate at the same time rental opportunities increase which also creates more revenue streams stemming from growth.

REITs are a way for everyday investors to access an asset class that is typically out of reach. They offer wider, lower-risk investment opportunities than other methods like stocks and bond investments do. And being able to invest in real estate without the risks associated with direct ownership means more people can take advantage of this lucrative opportunity.

Direct ownership of property is a rewarding option for investors who have the capital and expertise to manage their own investment. However, as one would expect with any type of long-term commitment, it also takes time and effort to maintain your portfolio in order to get the maximum return on investments. Investors looking for something simpler may be better off investing through REITs (Real Estate Investment Trust), which are traded publicly like stocks so that diversification happens automatically without needing extra work from you or an expert manager.

What to do next?

This blog post has introduced you to what a REIT is and how it can be an excellent investment. If this sounds like something that would work for your goals, book your consultation with Perfect Skip today! Let’s talk about how this complements your investment business. Real estate has so many options. Let’s strategize together!