What is a REIT?

And Why Would I Want One?

What is a REIT?

And Why Would I Want One?

Real Estate Investment Trusts (“REITs”) allow individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and typically operates income-producing real estate or related assets. You are buying shares in the operating company. Assets can be anything from a shopping mall, to self-storage to office buildings, warehouses or skyscrapers. 

REIT shares are bought and sold openly and can be a great way to diversify your investing portfolio. This is a passive investment so returns will naturally be somewhat less than you can make doing the work. 

Advantages

  • Liquidity - you can buy and sell shares relatively quickly

  • Passive

  • Diversification

Disadvantages

  • Lower returns (average 7-8%)

  • Dividends taxed as ordinary income

  • No control or vote - exposure to risks associated with asset classes.

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