What is a REIT?

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What is a REIT? REIT stands for Real Estate Investment Trust, and is a company that buys, develops, manages and sells real estate assets. REITs allow participants to invest in a professionally managed portfolio of real estate properties. REITs qualify as pass-through entities; companies who are able to distribute the majority of income cash flows to investors without taxation at the corporate level. Public real estate investment trusts (REITs) are tax-advantaged corporations that own real …

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…directly in real estate properties. Mortgage REITs invest in real estate mortgages and construction loans, while hybrid REITs own both equity and debt. Within these broad categories, REITs will typically focus their investments on a single property sector. I believe that REITs are a sound investment alternative that, over longer periods, should provide attractive money earnings performance as part of a multi-asset portfolio, which is key when all you invest in is the stock market.