Real Estate Investment Trusts (REITs) provide individuals with the opportunity to invest in large-scale, revenue-generating real estate. A REIT is a company that owns and typically operates real estate that generates income or related assets. REITs are listed on major stock exchanges and offer a range of benefits to investors. The main benefit of investing in a REIT is the quick and easy liquidation of investments in the real estate market, unlike the traditional way of disposing of real estate.
This makes it possible for individual investors to earn dividends from real estate investments without having to buy, manage, or finance any property themselves. REITs must invest in real assets and derive most of their income from real estate activities, including property leases and mortgage interest. In addition, a real estate presence can be good for a portfolio because it provides diversification and dividend-based income, and dividends are often higher than what can be achieved with other investments. A broker, investment advisor, or financial planner can help analyze an investor's financial objectives and recommend appropriate REIT investments.
REITs also provide an investment opportunity, such as an investment fund, that makes it possible for everyday Americans, not just Wall Street, banks and hedge funds, to benefit from valuable real estate, present the opportunity to access dividend-based income and total return, and help communities to grow, prosper and revitalize. Diversification is another benefit of investing in a REIT. REITs tend to follow the real estate cycle, which generally lasts a decade or more, while bond and stock market cycles typically last an average of about 5.75 years. A REIT is organized as a partnership, corporation, trust, or association that invests directly in real estate through the purchase of properties or through the purchase of mortgages.