REITs: Dividends & Diversification
A Real Estate Investment Trust (“REIT”) is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages.
REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
Equity REITs: Equity REITs invest in and own properties (thus responsible for the equity or value of their real estate assets). Their revenues come principally from their properties’ rents.
Mortgage REITs: Mortgage REITs deal in investment and ownership of property mortgages. These REITs loan money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans.
Hybrid REITs: Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages.
The primary objectives of REITS are to provide investors with diversification into a different asset class, current income, and the opportunity to own large commercial real estate properties you might not typically be able to afford on your own.
Are REITs for Me?
REITS could be appealing investments for investors seeking
REITs are subject to various risks such as illiquidity and property devaluation based on adverse economic and real estate market conditions and may not be suitable for all investors.
You should consider a REIT’s investment objectives, risks, and charges and expenses carefully before investing. Contact your BestVest Financial Consultant to request a prospectus, which contains this and other information about a specific REIT. Read it carefully before you invest.