My Sixth Blog: Invest in real estate with little money without buying a property. Learn about REITs.

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A real estate investment trust (“REIT”) is a company that owns, operates, or finances income-producing real estate. REITs provide an investment opportunity for anyone to invest in real estate by buying their stock either directly or through mutual funds or ETFs.

REIT stockholders earn income through dividends without actually having to go out and buy, manage, or finance property. Buying & selling units are comparatively easier as they are traded in the stock exchange, contrastingly selling physical real estate may become difficult as the trade can only be done when a buyer is discovered.

Approximately 150 million Americans live in households invested in REITs through their 401(k), IRAs, pension plans, and other investment funds.

REITs are mainly classified into two categories i.e. Equity REITs & Mortgage REITs which are also known as mREITs.

👉Equity real estate investment trusts are the most common type of REIT. They acquire, manage, build, renovate, and sell income-producing real estate. Their revenues are mainly generated through rental incomes on their real estate holdings.

👉mREITs (or mortgage REITs) don’t own real estate directly, instead, they finance real estate and earn income from the interest on these investments.

REITs must pay out at least 90% of their taxable income to shareholders—and most payout 100 %. In turn, shareholders pay the income taxes on those dividends.

In India Embassy and Mindspace were the two main REITs then Brookfield India REITS were launched in 2022 with an issue size of Rs. 3800 cr. They are all available in trading platforms for investment.








 

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