What Is A Real Estate Investment Trust?

A real estate investment trust is a device that permits you to invest in real estate and property but without the usually hassles associated with purchasing such property on your own. A real estate investment trust is a system where a group of investors collectively gather their funds into a legal trust and invest in various forms of real estate. If you've ever heard of other investment mechanisms such as mutual funds, you'll understand the way real estate investment trusts are supposed to work. A real estate investment trust may also be known as a REIT and a REIT invests in different types of property. The different types of property that are invested in may be residential or commercial or even for leisure purposes. Simple REITs may invest in property as a simple as an apartment block or as complex as a group of hotels and leisure parks. Some real estate investment trusts even own shopping centers and movie theatres and it all depends of the purposes of the people who initially set up the real estate investment trust.

Different types of REIT's exist and some of these trusts are private in nature. A number of these real estate investment trusts are public and can be found on stock exchanges such as the NYSE and the London Stock Exchange. One form of real estate investment trust is the mortgage REIT, which provides a unique service in that it supplies new home owners with money in order to purchase new property. People may also invest in such devices in order to get loans and securities which are backed by these REITs and mortgages. As with any investment device, a certain form of risk is always involved and methods have been created to effectively handle these types of risk. The risks that are associated with a real estate investment trust will vary and can be dependent on a varied number of factors some of which include the location the investments are based in and other factors.

In recent times REITs have increased in popularity due to a different number of reasons. Some people prefer real estate investment trusts because they are associated with factors that they can easily understand. Some people prefer REITs because they are identified with development and growth. Others simply make investments for certain reasons which are often driven by emotional factors. Statistics have shown that some relations exist between the prices of stock and the prices of real estate and profitability of REITs may easily be determined by monitoring for such statistics and varying volatility of stock markets in a particular region.

If you want to invest in real estate but you have often been scared of the problems of tying down all your money in one particular investment, REITs make perfect sense for you. The increased popularity of these devices, the growth of demand for quality real estate on a global scale as well as the opening of new vistas for investment such as the economies of newer countries on the boom such as the UAE and the countries of the former Eastern Bloc of Europe show better times ahead for early investors.

By Kelly Hunter

Various Types Of Real Estate Investments

There are several different types of real estate investments and it is important to understand what each type of investment is and what the benefits and risks involved are. The types of investments that involve real estate include Real Estate Investment Trusts which are also known as REITs, real estate partnerships, vacation rental property, rental property, and raw land investments. Each of these real estate investment types has its own advantages and disadvantages.

Real Estate Investment Trusts are companies that sells, buys, manages, and develops land and properties. These REITs are set up as a security that sells on all of the major exchanges just like a stock, and directly invests in real estate by mortgages or property. These trusts get special consideration concerning taxes and they usually offer a high yield and are very liquid compared to other real estate investment types. Individual people can invest in this type of real estate investment by purchasing shares directly on one of the open exchange markets or through an investment broker.

The next type of real estate investment we will look at is a real estate partnership. This is when several individuals partner together and pool their funds and resources for the sole purpose of real estate investment. Investments are made with joint ownership with the other partners in the real estate investment group.

Vacation rental property is one type of real estate investment that provides a rental income most of the time. This type is considered a long term investment, but a big advantage is that you can sell this property and get the value of the property no matter how many years you collect rent for the property. The disadvantage is that as the owner of the property you are responsible for any damage, repairs, and maintenance even if the renter caused the problem. If the problem was caused by the tenant then you do have some remedies available in civil court for the cost of repairs and parts. This investment property is generally rented for short periods of time, and there may be periods of vacancy where there is no rental income from it.

Rental property can be one of the best real estate investment types when it comes to long term income. This type of investment property usually provides a monthly income unless the property is vacant. No matter how long you own the investment property you should get back at least the value of your original investment, and in most cases much more. You collect rent for as long as you own the property without your investment ever losing value, so the monthly income minus expenses is a lot like a very high interest payment. Raw land real estate investment is when a person or company invests in raw land and then makes a profit off of the natural resources of the land or develops the property.

No matter which real estate investment type you choose, you should be aware of all the advantages and disadvantages for the type you are planning to invest in. Do the research and make your investment plan, including which types of real estate you want to invest in. Do your homework before investing and you will never be sorry afterward.

By Joel Teo