Real Estate Investment Trusts (REITs)

I'm reposting this on my blog, since it seems to have been lost in the shuffle of the new platform.


There are truly many options when you decide to invest. And one of the most interesting options right now are real estate investment trusts (REITs). REITs allow you the opportunity to make real estate investments without actually owning property. This can be a way to get involved in real estate investing without having to put up huge amounts of capital in order to buy a piece of property.

The basics of real estate investment trusts

REITs are companies that own real estate-related businesses or properties. A REIT may own one type of property, or a variety of different properties. These can include commercial or residential properties. Also, REITs are not limited to actually property investments. Some real estate investment trusts specialize in financing companies and lenders. So it is possible to use REITs to invest in real estate financing, as well as in actual property. REITs are traded on the stock market like any other security. It is important to remember that real estate investment trusts are not mutual funds. Each REIT is treated as an individual equity on the stock market.

Options offered involving real estate investment trusts

Because REITs are treated as individual equities, it is possible to include them in your investment portfolio in a variety of ways. There are mutual funds that include REITs. These are usually sector mutual funds, so make sure that your investment portfolio isn't skewed toward them. Also, there are exchange traded funds (ETFs) available of various real estate investment trusts. Such ETFs are also traded as if they were individual equities, and they offer you a chance to own a piece of several different REITs. The Dow Jones U.S. Real Estate IYR through iShares includes 75 different REITs. That's about 40 percent of the 190 registered REITs on the stock market.

Remember that if you invest in REITs that you need to make sure that you remember basic rules like a diverse investment portfolio. Make sure that you are careful to make an real estate investment just a portion of your portfolio, rather you use REITs or invest in actual property.

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