What Does Real Estate Investment Trust (REIT) Mean?

A security that trades like a stock on an exchange; REITs invest directly in real estate through either properties or mortgages. REITs receive special tax considerations and typically offer investors high yields as well as opportunities to invest in the real estate market without buying properties. REITs include equity REITs, in which one invests in and owns properties and thus is responsible for the equity or value of the real estate assets; the revenues come principally from the properties' rents. Mortgage REITs involve investment in and ownership of property mortgages; these REITs loan money for mortgages to owners of real estate or purchase existing mortgages or mortgage-backed securities. The revenues are generated primarily by the interest earned on the mortgage loans. Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages. Investopedia explains Real Estate Investment Trust (REIT) Individuals can invest in R ... more