Real estate investment trusts (REITs) is an investment trust where many people allocate their money in commercial and residential real estate businesses. The trust manages and possesses many commercial properties and mortgages. The trust also invests in other types of real estate. Real estate investment trusts shows the best characteristics of both real estate and stocks, here is a list of the top Real Estate Investment Trust by market cap.
Real estate investment trust is a company or conglomerate that operates income producing real estate such as apartments, offices, warehouses, shopping centers, and hotels. Though a variety of property types are there, most of the REITs concentrate on any one of the property types only. Those specializing in health care facilities are called the health care REITs. The real estate investment trust was formed to make large scale income raising investments in real estate, which can be easily accessed by smaller investors allowing you to be exposed to the market without having own he property. The trust’s main advantage is that it helps a person to select an appropriate share to invest on from a variety of group rather than investing on a single building or management. Essentially you are buying shares of a company that buys and manages property.
Real estate investment trusts are broadly classified into three categories – equity, mortgage and hybrid. The first category involves the ownership and management of income producing real estate. Mortgage real estate investment trusts offers money directly to real estate owners by acquiring loans or mortgage backed securities. The third category not only owns properties but also provide loans to real estate owners and operators.
Real estate investment trusts differ from limited partnerships in many ways. One of the main differences lies in reporting the annual tax information to the investors and another is that there is no minimum investment amount. For a company to become a real estate investment trust, it should share out 90 percent or more of its taxable income to its shareholders once in a year. Once a company is qualified as an REIT, it is allowed to reduce the dividends given to its shareholders.
REITS provide an excellent opportunity to investors who want to diversify their portfolio and want to be exposed to the Real Estate Market, not only do they provide less volatile assets, but long term investors are rewarded with quality dividend payments quarterly or even monthly, this is one of the main reasons why I will be investing more in REITS in 2022.
Here is list of the REITS that are currently in my watch list:
- Physicians Realty $DOC
- Medical Properties $MPW
- Realty Income $O
- CubeSmart $CUBE
- American Campus $ACC
- Digital Realty $DLR
- Extra Space $EXR
Before you invest make sure to do the proper research, markets can change dramatically really fast, my strategy is to start with a small position and dollar cost average until I hit the price range that I targeted, while that happens I plan on collecting their dividends and reinvesting them to grow the portfolio even faster.
Do you invest in REITS and if you do, which ones do you like? Feel free to leave a comment.