Real Estate Investment Trusts (REITs)

• Companies that invest directly in real estate and trade on exchanges as a stock.
• Enable you to invest in various types of commercial and residential real estate without having to actually purchase a property.
• REITs by law must pay 90% of all taxable earnings out to shareholders.  Thus, you typically will find REITs paying sizable dividends.
• REITs typically aren’t thought of as growth stocks, which means you should not expect a lot of price appreciation per share.
• When you’re thinking of investing in real estate, consider if investing in a REIT would be a better option
  • Easier entry and exit from your investment (trades on an exchange).
  • No need to secure a loan (You purchase on a per share – not per property).
  • No need to search for the property and identify a renter.
  • REITs benefit from economies of scale (Example – With a large number of units, they will have a lower per unit maintenance bill than a smaller operation.).
  • Greater diversification is possible through owning REITs than would be by owning a few properties.