Real Estate Investment Trust (REIT)

A real estate investment trust is a type of security that is sold like a stock on the stock exchange. Therefore, it is possible to buy shares directly from a stock exchange, or by purchasing a mutual fund which handles real estate.

How a REIT Works

Frequently, the real estate investment trust buys and sells real estate on its own as well.   Moreover, real estate investment trusts may purchase larger investment properties, including apartment complexes, resorts, hotels, commercial buildings and more.  In addition, real estate investment trusts sometimes concentrate its purchasing in one particular area, such as commercial property.  Furthermore, many real estate investment land trust offer dividend reinvestment plans which automatically reinvest the dividends into other real estate ventures held by the trust.  The trust also receives special tax treatment by the Internal Revenue Service.

Types of REITs

There are also equity, mortgage and hybrid types of real estate investment trusts.  The equity real estate investment trust will invest and own property, receiving dividends, or trusts income, based upon the property.  Therefore, collection of rent serves as a basis for the dividend.  The mortgage real estate investment trust invests in mortgages.  Finally, the hybrid model of real estate investment trusts invest in property and mortgages.  Real estate investment trusts generally have high yields.  In addition, this form of investment offers a significant liquid way to invest in real estate.

Legal Help

Whether a real estate investment trust is appropriate for your own estate planning needs depends upon your own interests and circumstances; thus, a consultation with an experienced estate planning attorney will ensure that your interests are attained by the creation of a tailored estate plan.