What Every Investor Should Know About: REITs?

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Investing in properties and companies has long been one of the easiest ways to amass a large amount of money – of course, as long as you were aware of what you were doing. Compared to the past, where investor opportunities were either restricted to the elite or were simply too hard to understand for the average person, the present has gone a long way in ensuring that even the average person can become an investor with the right decisions.

Property investment nowadays, for example, has greatly developed to include different types and ways of property investment. One such type of investment that has developed through this is the REITs – or simply, real estate investment trusts Australia. To explain the term in the simplest possible way, a REIT is basically a company that either invests in or finances (hence an investment trust) a number of real estate properties. Basically, investing in REITs is similar to any other investment process – investors can purchase stocks related to the company, and thereby receive a regular income through their investment in the portfolio of the company.

The estates that most REITs have invested in provide valuable income – for example, either in the form of rent or as revenues from high-end hotels and resorts (such as Crowne Plaza). It is common for one REIT to specialize in a specific sector of the real estate industry – for example, the office REITs will usually manage office complexes and the like, whereas a healthcare REIT will have properties such as hospitals and clinics. As the real estate industry is a lucrative industry, it is not too hard to see why the regular dividends that investors earn from their investments in a REIT are attractive to the average investor.REITs are generally categorized as of three types: the equity REITs, the mortgage REITs and the hybrid REITs. The equity REITs are basically your standard type of REIT, and most companies belong to this type. They invest in different types of real estates and allow their investors to purchase shares from their portfolios. The mortgage REITs differ from the fact that they invest and have ownership of property mortgages. The hybrid REITs, as you would infer, are a mix of the first two types.

As the REITs are heavily regulated in most countries, there is often no reason to be wary of these companies (as long as you ascertain yourself of their legitimacy). One of the most important compliances that these companies are subjected to is that they should pay their investors at least 90% of their taxable income in the form of dividends – and it is not rare to find companies that go all the way and dish out their entire taxable income to investors.