Real Estate
Investment Trust
(REIT)
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.
Individuals can
invest in REITs either by
purchasing their shares directly on an open
exchange or by investing in a mutual fund that
specializes in public real estate.
An additional benefit to investing in REITs is
the fact that many are accompanied by
dividend reinvestment plans (DRIPs).
Among other things, REITs invest in shopping
malls, office buildings, apartments,
warehouses and hotels.
Some REITs will invest specifically in one
area of real estate - shopping malls, for
example - or in one specific region, state or
country. Investing in REITs is a liquid,
dividend-paying means of participating in the
real estate market.
Investment Trust
(REIT)
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.
Individuals can
invest in REITs either by
purchasing their shares directly on an open
exchange or by investing in a mutual fund that
specializes in public real estate.
An additional benefit to investing in REITs is
the fact that many are accompanied by
dividend reinvestment plans (DRIPs).
Among other things, REITs invest in shopping
malls, office buildings, apartments,
warehouses and hotels.
Some REITs will invest specifically in one
area of real estate - shopping malls, for
example - or in one specific region, state or
country. Investing in REITs is a liquid,
dividend-paying means of participating in the
real estate market.
Distribution Reinvestment
A process whereby the distribution from a limited partnership, real
estate investment trust (REIT) or other pooled investment is
automatically reinvested into common units or shares in a fund,
often at a discount to the current market price. Investors can set up
distribution reinvestment plans with the partnership itself, or with a
broker through which the units are held.
Also known as a DRIP, but not to be confused with dividend
reinvestment plans (also called DRIPs), which are found in many
large-cap stocks and mutual funds. Most distributions are done
quarterly, but some may occur on a monthly basis.
Investors who participate in these programs also generally have
commissions and other fees waived, making it an advantageous
and affordable way to grow their investment. Meanwhile, the
financial managers have a stable way to grow assets with current
investors.
A process whereby the distribution from a limited partnership, real
estate investment trust (REIT) or other pooled investment is
automatically reinvested into common units or shares in a fund,
often at a discount to the current market price. Investors can set up
distribution reinvestment plans with the partnership itself, or with a
broker through which the units are held.
Also known as a DRIP, but not to be confused with dividend
reinvestment plans (also called DRIPs), which are found in many
large-cap stocks and mutual funds. Most distributions are done
quarterly, but some may occur on a monthly basis.
Investors who participate in these programs also generally have
commissions and other fees waived, making it an advantageous
and affordable way to grow their investment. Meanwhile, the
financial managers have a stable way to grow assets with current
investors.
REIT-REAL ESTATE INVESTMENT TRUST
A real estate investment trust (REIT) is a real estate company that
offers common shares to the public. In this way, a REIT stock is
similar to any other stock that represents ownership in an operating
business.
But a REIT has two unique features: its primary business is
managing groups of income-producing properties and it must
distribute most of its profits as dividends.
This is a great opportunity for real estate investors to invest without
taking a mortgage. You can invest in different area:
REIT-RESIDENTIAL
A real estate investment trust (REIT) is a real estate company that
offers common shares to the public. In this way, a REIT stock is
similar to any other stock that represents ownership in an operating
business.
But a REIT has two unique features: its primary business is
managing groups of income-producing properties and it must
distribute most of its profits as dividends.
This is a great opportunity for real estate investors to invest without
taking a mortgage. You can invest in different area:
REIT-RESIDENTIAL
The REIT Status
To qualify as a REIT
with the IRS, a real estate
company must agree to pay out in dividends
at least 90% of its taxable profit (and fulfill
additional but less important requirements).
By having REIT status, a company avoids
corporate income tax. A regular corporation
makes a profit and pays taxes on the entire
profits, and then decides how to allocate its
after-tax profits between dividends and
reinvestment; but a REIT simply distributes
all or almost all of its profits and gets to skip
the taxation.
To qualify as a REIT
with the IRS, a real estate
company must agree to pay out in dividends
at least 90% of its taxable profit (and fulfill
additional but less important requirements).
By having REIT status, a company avoids
corporate income tax. A regular corporation
makes a profit and pays taxes on the entire
profits, and then decides how to allocate its
after-tax profits between dividends and
reinvestment; but a REIT simply distributes
all or almost all of its profits and gets to skip
the taxation.
ADVANTAGES OF REITs
When you buy a share of a REIT, you are essentially buying a
physical asset with a long expected life span and potential for
income through rent and property appreciation.
This contrasts common stocks where investors are buying the right
to participate in the profitability of the company through ownership.
When purchasing a REIT, one is not only taking a real stake in the
ownership of property via increases and decreases in value, but one
is also participating in the income generated by the property.
This creates a bit of a safety net for investors as they will always
have rights to the property underlying the trust while enjoying the
benefits of their income.
When you buy a share of a REIT, you are essentially buying a
physical asset with a long expected life span and potential for
income through rent and property appreciation.
This contrasts common stocks where investors are buying the right
to participate in the profitability of the company through ownership.
When purchasing a REIT, one is not only taking a real stake in the
ownership of property via increases and decreases in value, but one
is also participating in the income generated by the property.
This creates a bit of a safety net for investors as they will always
have rights to the property underlying the trust while enjoying the
benefits of their income.
ADVANTAGES
Another advantage that this product provides to the average investor is
the ability to invest in real estate without the normally associated large
capital and labor requirements. Furthermore, as the funds of this trust are
pooled together, a greater amount of diversification is generated as the
trust companies are able to buy numerous properties and reduce the
negative effects of problems with a single asset.
Individual investors trying to mimic a REIT would need to buy and maintain
a large number of investment properties, and this generally entails a
substantial amount of time and money in an investment that is not easily
liquidated. When buying a REIT, the capital investment is limited to the
price of the unit, the amount of labor invested is constrained to the
amount of research needed to make the right investment, and the shares
are liquid on regular stock exchanges
Another advantage that this product provides to the average investor is
the ability to invest in real estate without the normally associated large
capital and labor requirements. Furthermore, as the funds of this trust are
pooled together, a greater amount of diversification is generated as the
trust companies are able to buy numerous properties and reduce the
negative effects of problems with a single asset.
Individual investors trying to mimic a REIT would need to buy and maintain
a large number of investment properties, and this generally entails a
substantial amount of time and money in an investment that is not easily
liquidated. When buying a REIT, the capital investment is limited to the
price of the unit, the amount of labor invested is constrained to the
amount of research needed to make the right investment, and the shares
are liquid on regular stock exchanges
ADVANTAGES
The final, and probably the most important, advantage that REITs provide
is their requirement to distribute nearly 90% of their yearly taxable
income, created by income producing real estate, to their shareholders.
This amount is deductible on a corporate level and generally taxed at the
personal level. So, unlike with dividends, there is only one level of taxation
for the distributions paid to investors.
This high rate of distribution means that the holder of a REIT is greatly
participating in the profitability of management and property within the
trust, unlike in common stock ownership where the corporation and its
board decide whether or not excess cash is distributed to the shareholder
The final, and probably the most important, advantage that REITs provide
is their requirement to distribute nearly 90% of their yearly taxable
income, created by income producing real estate, to their shareholders.
This amount is deductible on a corporate level and generally taxed at the
personal level. So, unlike with dividends, there is only one level of taxation
for the distributions paid to investors.
This high rate of distribution means that the holder of a REIT is greatly
participating in the profitability of management and property within the
trust, unlike in common stock ownership where the corporation and its
board decide whether or not excess cash is distributed to the shareholder
Conclusion
With so many different ways to invest your
money, it's important that any decision you
make is well informed. This applies to
stocks, bonds, mutual funds, REITs, or any
other investment. Nevertheless, REITs have
some interesting features that might make a
good fit in your portfolio. Hopefully, this
article has given you some insight into this
unique type of security and expanded your
investment opportunities
With so many different ways to invest your
money, it's important that any decision you
make is well informed. This applies to
stocks, bonds, mutual funds, REITs, or any
other investment. Nevertheless, REITs have
some interesting features that might make a
good fit in your portfolio. Hopefully, this
article has given you some insight into this
unique type of security and expanded your
investment opportunities
DIVIDENDS
1. A distribution of a portion of a company's
earnings, decided by the board of directors,
to a class of its shareholders. The dividend
is most often quoted in terms of the dollar
amount each share receives (dividends per
share). It can also be quoted in terms of a
percent of the current market price,
referred to as dividend yield.
2. Mandatory distributions of income and
realized capital gains made to mutual fund
investors.
1. Dividends may be in
the form of cash, stock or
property. Most secure and stable
companies offer dividends to their
stockholders. Their share prices might not
move much, but the dividend attempts to
make up for this.
High-growth companies rarely offer
dividends because all of their profits are
reinvested to help sustain
higher-than-average growth.
1. A distribution of a portion of a company's
earnings, decided by the board of directors,
to a class of its shareholders. The dividend
is most often quoted in terms of the dollar
amount each share receives (dividends per
share). It can also be quoted in terms of a
percent of the current market price,
referred to as dividend yield.
2. Mandatory distributions of income and
realized capital gains made to mutual fund
investors.
1. Dividends may be in
the form of cash, stock or
property. Most secure and stable
companies offer dividends to their
stockholders. Their share prices might not
move much, but the dividend attempts to
make up for this.
High-growth companies rarely offer
dividends because all of their profits are
reinvested to help sustain
higher-than-average growth.
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REIT: Real Estate Investment Trust. A GREAT WAY TO INVEST IN REAL ESTATE WITHOUT TAKING A MORTGAGE LOAN.--
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| REAL ESTATE INVESTMENT TRUSTS (REIT) REIT's: A GREAT WAY TO INVEST IN REAL ESTATE WITHOUT TAKING A MORTGAGE LOAN. GO MAKE YOURSELF RICHER; GO INVEST WHERE THE BIG FINANCIAL INSTITUTIONS INVEST THEIR MONEY. Individual Investors Individual investors represent a core component of the REIT investment universe. Whether investing in individual companies, through a REIT mutual fund or exchange-traded fund or through a retirement plan, an increasing number of individuals have recognized the benefits of including a REIT allocation in their investment portfolios. |
FORECLOSURE INVESTMENT
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A “Perfect Storm” of events has made investing
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now’s the time for you to profit...
THE HOME BUYING GUIDE!--------------------
IMPORTANT THINGS TO KNOW BEFORE
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The home-buying process doesn't need to be
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through the process and answer your questions
on what you should expect from us as your
realtor, where
to look for loans, and what to watch out for
when closing the deal.
HOME SELLING: WAYS TO SELL A
PROPERTY FAST AND EASY FOR THE TOP
PRICE!
Selling a home is a big decision and requires
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will walk you through the
process of selling your home.
Florida Real Estate for sale: Wonderful prices,
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NO OTHER INVESTMENTS BUILD WEALTH
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NOW REALLY IS A GREAT TIME TO BUY A
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COMMERCIAL REAL ESTATE; A BETTER
WAY TO INVEST AND GET RICHER! MULTI-
WAYS TO WIN BIG IN REAL ESTATE
1031 Exchange, Tax Saving Tips for Real
Estate Investors and landlords Give Financial
Advantage
MIAMI REAL ESTATE: The Time is Now to
Profit from Real Estate investing--
A “Perfect Storm” of events has made
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profit...
CALL Mr. ANTONY AT: 786-709-6577 ---
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COMMERCIAL LEASE: Before you rent space
for your business, be sure you understand
these basic facts about commercial leases.
The Time is Now to Profit from Foreclosure
A “Perfect Storm” of events has made investing
in foreclosure properties better than ever - and
now’s the time for you to profit...
THE HOME BUYING GUIDE!--------------------
IMPORTANT THINGS TO KNOW BEFORE
BUYING...
The home-buying process doesn't need to be
scary. Our step-by-step guide will walk you
through the process and answer your questions
on what you should expect from us as your
realtor, where
to look for loans, and what to watch out for
when closing the deal.
HOME SELLING: WAYS TO SELL A
PROPERTY FAST AND EASY FOR THE TOP
PRICE!
Selling a home is a big decision and requires
a lot of work. From getting the house ready to
reviewing the escrow papers, our helpful guide
will walk you through the
process of selling your home.
Florida Real Estate for sale: Wonderful prices,
great location,extraordinary view,very spacious.
NO OTHER INVESTMENTS BUILD WEALTH
LIKE REAL ESTATE!
NOW REALLY IS A GREAT TIME TO BUY A
PROPERTY:
COMPETITIVE PRICES, LOW INTEREST
RATES, MANY CHOICES
COMMERCIAL REAL ESTATE; A BETTER
WAY TO INVEST AND GET RICHER! MULTI-
WAYS TO WIN BIG IN REAL ESTATE
1031 Exchange, Tax Saving Tips for Real
Estate Investors and landlords Give Financial
Advantage
MIAMI REAL ESTATE: The Time is Now to
Profit from Real Estate investing--
A “Perfect Storm” of events has made
investing in Real Estate properties better
than ever - and now’s the time for you to
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CALL Mr. ANTONY AT: 786-709-6577 ---
Fortune International Realty
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for your business, be sure you understand
these basic facts about commercial leases.
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All About REITs
Over half a century, the U.S. real
estate investment trust (REIT) industry
has become an important segment of the U.S. economy and
investment markets. U.S. REITs have seen their equity market
capitalization soar from $90 billion to roughly $200 billion in just the
past 10 years. In the process, that growth has set the stage for the
adoption of the REIT approach to securitized real estate investment
across the globe.
Congress created REITs in the U.S. in 1960 as a way to make
investment in large-scale, income-producing real estate accessible to
all investors in the same way they typically invest otherwise – through
the purchase and sale of liquid securities.
Prior to the creation of listed real estate equities, access to the
investment returns of commercial real estate equity as a core asset
was available only to institutions and wealthy individuals having the
financial wherewithal to undertake direct real estate investment.
In its early years, the industry was dominated by mortgage REITs,
which provide debt financing for commercial or residential properties
through their investments in mortgages and mortgage-backed
securities.
The market’s interest in equity REITs, which today usually both own
and manage commercial properties, initially was limited because the
ownership and management of assets were required to remain
separate.
That restriction changed with the passage of the Tax Reform Act of
1986, which permitted REITs to both own and manage their properties
as vertically integrated companies and helped set the stage for a
secular wave of equity REIT IPOs in the mid-1990s.
Currently, 83 percent of the 134 publicly traded U.S. REITs are equity
REITs that own and most often manage commercial real estate and
derive most of their revenue and income from rents. In aggregate,
these companies own properties across all major property sectors
and all major geographic regions.
In order for a company to qualify as a REIT in the U.S., it must comply
with certain ground rules specified in the Internal Revenue Code. These
include: investing at least 75 percent of total assets in real estate;
deriving at least 75 percent of gross income as rents from real
property or interest from mortgages on real property; and distributing
annually at least 90 percent of taxable income to shareholders in the
form of dividends.
Over half a century, the U.S. real
estate investment trust (REIT) industry
has become an important segment of the U.S. economy and
investment markets. U.S. REITs have seen their equity market
capitalization soar from $90 billion to roughly $200 billion in just the
past 10 years. In the process, that growth has set the stage for the
adoption of the REIT approach to securitized real estate investment
across the globe.
Congress created REITs in the U.S. in 1960 as a way to make
investment in large-scale, income-producing real estate accessible to
all investors in the same way they typically invest otherwise – through
the purchase and sale of liquid securities.
Prior to the creation of listed real estate equities, access to the
investment returns of commercial real estate equity as a core asset
was available only to institutions and wealthy individuals having the
financial wherewithal to undertake direct real estate investment.
In its early years, the industry was dominated by mortgage REITs,
which provide debt financing for commercial or residential properties
through their investments in mortgages and mortgage-backed
securities.
The market’s interest in equity REITs, which today usually both own
and manage commercial properties, initially was limited because the
ownership and management of assets were required to remain
separate.
That restriction changed with the passage of the Tax Reform Act of
1986, which permitted REITs to both own and manage their properties
as vertically integrated companies and helped set the stage for a
secular wave of equity REIT IPOs in the mid-1990s.
Currently, 83 percent of the 134 publicly traded U.S. REITs are equity
REITs that own and most often manage commercial real estate and
derive most of their revenue and income from rents. In aggregate,
these companies own properties across all major property sectors
and all major geographic regions.
In order for a company to qualify as a REIT in the U.S., it must comply
with certain ground rules specified in the Internal Revenue Code. These
include: investing at least 75 percent of total assets in real estate;
deriving at least 75 percent of gross income as rents from real
property or interest from mortgages on real property; and distributing
annually at least 90 percent of taxable income to shareholders in the
form of dividends.
-Find REITs by Ticker Symbol, Buy Reit's,
Invest In Reit's.-
The following table is a list of publicly
traded REITs. Click on the name of
a REIT to -Click on the ticker symbols of
the companies to obtain detailed stock
information.
What About: Real Estate Mutual Funds As
A Solid Investment.-.
''RESPA - Real Estate Settlement Procedures Act -
''TILA-Truth in Lending Act-Reg Z Resource Center-
''ECOA-Equal Credit Opportunity Act -
''Reg Z - Regulation Z - Truth in Lending-Regulation Z financial definition
of Regulation Z ...A Federal Reserve regulation requiring lenders to
disclose all terms of loans to potential borrowers, including, but not
limited to, the interest rates
''HMDA-Home Mortgage Disclosure Act --
''The Fair Lending Laws --
Invest In Reit's.-
The following table is a list of publicly
traded REITs. Click on the name of
a REIT to -Click on the ticker symbols of
the companies to obtain detailed stock
information.
What About: Real Estate Mutual Funds As
A Solid Investment.-.
''RESPA - Real Estate Settlement Procedures Act -
''TILA-Truth in Lending Act-Reg Z Resource Center-
''ECOA-Equal Credit Opportunity Act -
''Reg Z - Regulation Z - Truth in Lending-Regulation Z financial definition
of Regulation Z ...A Federal Reserve regulation requiring lenders to
disclose all terms of loans to potential borrowers, including, but not
limited to, the interest rates
''HMDA-Home Mortgage Disclosure Act --
''The Fair Lending Laws --
Are REITS Right for Your Portfolio?
Real Estate Investment Trusts offer a way for smaller
investors to buy into big real estate.
Real Estate Investment Trust - REITWhat Does Real Estate
Investment Trust - REIT Mean?
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. Investopedia explains Real Estate Investment Trust - REIT
Individuals can invest in REITs either by purchasing their shares directly on an open exchange or by investing in a mutual
fund that specializes in public real estate. An additional benefit to investing in REITs is the fact that many are accompanied
by dividend reinvestment plans (DRIPs).
Among other things, REITs invest in shopping malls, office buildings, apartments, warehouses and hotels. Some REITs will
invest specifically in one area of real estate - shopping malls, for example - or in one specific region, state or country.
Investing in REITs is a liquid, dividend-paying means of participating in the real estate market.
Real Estate Investment Trusts offer a way for smaller
investors to buy into big real estate.
Real Estate Investment Trust - REITWhat Does Real Estate
Investment Trust - REIT Mean?
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. Investopedia explains Real Estate Investment Trust - REIT
Individuals can invest in REITs either by purchasing their shares directly on an open exchange or by investing in a mutual
fund that specializes in public real estate. An additional benefit to investing in REITs is the fact that many are accompanied
by dividend reinvestment plans (DRIPs).
Among other things, REITs invest in shopping malls, office buildings, apartments, warehouses and hotels. Some REITs will
invest specifically in one area of real estate - shopping malls, for example - or in one specific region, state or country.
Investing in REITs is a liquid, dividend-paying means of participating in the real estate market.
.
Add Some Real Estate To Your
Portfolio - From REITs to owning your own
home, find out how diversify your portfolio with real estate assets.
With real estate gaining a greater foothold in the capital allocation
decisions of both institution and retail investors, there has been
increasing development in real estate funds.
Due to the capital intensity of real
estate investing, its requirement for active
management and the rise in global real estate opportunities,
institutions are gradually moving to real estate funds of funds to allow
for appropriate asset management.
The same is true for retail investors, who now have a much larger
selection of real estate mutual funds, allowing for efficient capital
allocation and diversification. Like any other investment sector, real
estate has its benefits and its disadvantages.
However, real estate should be considered for most investment
portfolios, and real estate investment trusts (REITs) and real estate
mutual funds may be the best methods to fill that allocation. (To learn
more, check out What are REITs?)
Real Estate for Institutional
Investors
Real estate investment has long been dominated by large investors,
such as pension funds, insurance companies and other large financial
institutions.
Thanks to the globalization of real estate investing and new offshore
opportunities, both of which allow for greater diversification and return
potential, there is an increasing trend toward finding a permanent
place for real estate in institutional portfolio allocations.
The permanent allocation of real estate capital comes with some
hurdles. First and foremost, it is capital intensive. Unlike stocks that
can be purchased in small increments, commercial real estate
investments require relatively large sums and direct investment often
results in lumpy portfolios and inordinate risks in either location or by
property type.
Real estate also requires active
management, which is labor intensive. Managing a real
estate allocation requires significant resources relative to traditional
investments. As a result of these issues, institutions tend to gravitate
toward real estate funds and funds of funds, in order to increase
management efficiency and capital distribution.
The same advantages that institutions gain from real estate funds can
be achieved by retail investors through REITs, REIT exchange-traded
funds (ETFs) and real estate mutual funds. (To learn more about ETFs,
check out Advantages of Exchange-Traded Funds.)
Retail Investors
The following are several ways that retail investors can access the
return potential of real estate and obtain exposure to the asset class.
Direct Investment
This strategy relates to investors directly selecting specific properties.
The great advantage in this strategy is control. Direct ownership in
property allows for the development and execution of strategy and
direct influence over return. However, direct investment makes it very
difficult to create a well diversified real estate portfolio.
The real estate allocation for most retail investors is not large enough
to purchase enough properties to diversify and will increase exposure
to local property market and property type risks. (For more insight, see
Investing In Real Estate.)
Real Estate Investment Trusts
(REIT)
REIT shares are private and public equity stock in companies
structured as trusts that invest in real estate, mortgages or other real
estate collateralized investments.
REITs typically own and operate real estate properties. These may
include multifamily residential properties, grocery-anchored shopping
centers, local retail properties and strip centers, malls, commercial
office space and hotels.
Real estate investment trusts are run by a board of directors that
conducts investment management decisions on behalf of the trust.
REITs pay little or no federal income tax as long as they distribute 90%
of taxable income as dividends to shareholders.
Even though the tax advantage increases after-tax cash flows, the
inability for REITs to retain cash can significantly hamper growth and
long-term appreciation. Apart from the tax advantage, REITS provide
many of the same advantages and disadvantages as equities.
Because REIT managers provide the strategic vision and make the
investment and property decisions, they reduce management issues
for investors.
For retail investors, the greatest disadvantage is the difficulty in
investing in them with limited capital and the significant amount of
asset-specific knowledge and analysis required in selecting them and
forecasting their performance. (To learn more, read The REIT Way.)
REIT investments have a much higher correlation to the overall stock
market than direct real estate investments, which leads some to
downplay their diversification abilities. Volatility in the REIT market has
also been higher than direct real estate.
Explanations for this is due to the influence of macroeconomic forces
on REIT values and the fact that REIT stocks are continuously valued,
while direct real estate is influenced more by local property markets
and is valued using the appraisal method, which tends to smooth
investment returns
Real Estate Mutual Funds
Real estate mutual funds invest primarily in REIT stocks and real estate
operating companies. They provide the ability to gain diversified
exposure to real estate with a relatively small amount of capital.
Depending on their strategy and diversification goals, they provide
investors with much broader asset selection than can be achieved in
buying REIT stocks alone and also provide the flexibility of easily
moving from one fund into another.
Flexibility is also advantageous to the mutual fund investor due to the
comparative ease in acquiring and disposing of assets on a systematic
and regulated exchange, as opposed to direct investing which is
arduous and expensive. More speculative investors can tactically
overweight certain property or regional exposures to maximize return.
Creating an exposure to a broad base of mutual funds can also reduce
transaction costs and commission relative to buying individual REIT
stocks. Another significant advantage to retail investors is the
analytical and research information provided by the funds on acquired
assets and management's perspective on the viability and
performance of specific real estate investments and as an asset class.
Real estate funds allow investors who do not have the
desire, knowledge or capital to buy land or property on their own to
participate in the income and long-term growth potential of real estate.
Although real estate mutual funds bring liquidity to a traditionally illiquid
asset class, naysayers on the use of these funds believe they are not
akin to direct investment in real estate. (For more insight, see The
Risks of Real Estate Sector Funds.)
Home Ownership
Many retail investors who have not considered real estate allocations
for their investment portfolios fail to realize that they may already be
investing in real estate by owning a home.
Not only do they already have real estate exposure, most are also
taking additional financial risk by having a home mortgage. For the
most part, this exposure has been beneficial and has helped many
people amass the capital required for retirement.
Conclusion
Although retail investors can and should take into account home
ownership when conducting their portfolio allocations, additional, more
liquid investments in real estate might also be considered. For those
with the requisite trading skills and capital,
REIT investing provides access to some of the benefits of real estate
investing without the need for direct ownership. For others considering
a smaller allocation or for those that do not want to be saddled by
asset selection but require maximum diversification, real estate
mutual funds would be an appropriate choice.
Add Some Real Estate To Your
Portfolio - From REITs to owning your own
home, find out how diversify your portfolio with real estate assets.
With real estate gaining a greater foothold in the capital allocation
decisions of both institution and retail investors, there has been
increasing development in real estate funds.
Due to the capital intensity of real
estate investing, its requirement for active
management and the rise in global real estate opportunities,
institutions are gradually moving to real estate funds of funds to allow
for appropriate asset management.
The same is true for retail investors, who now have a much larger
selection of real estate mutual funds, allowing for efficient capital
allocation and diversification. Like any other investment sector, real
estate has its benefits and its disadvantages.
However, real estate should be considered for most investment
portfolios, and real estate investment trusts (REITs) and real estate
mutual funds may be the best methods to fill that allocation. (To learn
more, check out What are REITs?)
Real Estate for Institutional
Investors
Real estate investment has long been dominated by large investors,
such as pension funds, insurance companies and other large financial
institutions.
Thanks to the globalization of real estate investing and new offshore
opportunities, both of which allow for greater diversification and return
potential, there is an increasing trend toward finding a permanent
place for real estate in institutional portfolio allocations.
The permanent allocation of real estate capital comes with some
hurdles. First and foremost, it is capital intensive. Unlike stocks that
can be purchased in small increments, commercial real estate
investments require relatively large sums and direct investment often
results in lumpy portfolios and inordinate risks in either location or by
property type.
Real estate also requires active
management, which is labor intensive. Managing a real
estate allocation requires significant resources relative to traditional
investments. As a result of these issues, institutions tend to gravitate
toward real estate funds and funds of funds, in order to increase
management efficiency and capital distribution.
The same advantages that institutions gain from real estate funds can
be achieved by retail investors through REITs, REIT exchange-traded
funds (ETFs) and real estate mutual funds. (To learn more about ETFs,
check out Advantages of Exchange-Traded Funds.)
Retail Investors
The following are several ways that retail investors can access the
return potential of real estate and obtain exposure to the asset class.
Direct Investment
This strategy relates to investors directly selecting specific properties.
The great advantage in this strategy is control. Direct ownership in
property allows for the development and execution of strategy and
direct influence over return. However, direct investment makes it very
difficult to create a well diversified real estate portfolio.
The real estate allocation for most retail investors is not large enough
to purchase enough properties to diversify and will increase exposure
to local property market and property type risks. (For more insight, see
Investing In Real Estate.)
Real Estate Investment Trusts
(REIT)
REIT shares are private and public equity stock in companies
structured as trusts that invest in real estate, mortgages or other real
estate collateralized investments.
REITs typically own and operate real estate properties. These may
include multifamily residential properties, grocery-anchored shopping
centers, local retail properties and strip centers, malls, commercial
office space and hotels.
Real estate investment trusts are run by a board of directors that
conducts investment management decisions on behalf of the trust.
REITs pay little or no federal income tax as long as they distribute 90%
of taxable income as dividends to shareholders.
Even though the tax advantage increases after-tax cash flows, the
inability for REITs to retain cash can significantly hamper growth and
long-term appreciation. Apart from the tax advantage, REITS provide
many of the same advantages and disadvantages as equities.
Because REIT managers provide the strategic vision and make the
investment and property decisions, they reduce management issues
for investors.
For retail investors, the greatest disadvantage is the difficulty in
investing in them with limited capital and the significant amount of
asset-specific knowledge and analysis required in selecting them and
forecasting their performance. (To learn more, read The REIT Way.)
REIT investments have a much higher correlation to the overall stock
market than direct real estate investments, which leads some to
downplay their diversification abilities. Volatility in the REIT market has
also been higher than direct real estate.
Explanations for this is due to the influence of macroeconomic forces
on REIT values and the fact that REIT stocks are continuously valued,
while direct real estate is influenced more by local property markets
and is valued using the appraisal method, which tends to smooth
investment returns
Real Estate Mutual Funds
Real estate mutual funds invest primarily in REIT stocks and real estate
operating companies. They provide the ability to gain diversified
exposure to real estate with a relatively small amount of capital.
Depending on their strategy and diversification goals, they provide
investors with much broader asset selection than can be achieved in
buying REIT stocks alone and also provide the flexibility of easily
moving from one fund into another.
Flexibility is also advantageous to the mutual fund investor due to the
comparative ease in acquiring and disposing of assets on a systematic
and regulated exchange, as opposed to direct investing which is
arduous and expensive. More speculative investors can tactically
overweight certain property or regional exposures to maximize return.
Creating an exposure to a broad base of mutual funds can also reduce
transaction costs and commission relative to buying individual REIT
stocks. Another significant advantage to retail investors is the
analytical and research information provided by the funds on acquired
assets and management's perspective on the viability and
performance of specific real estate investments and as an asset class.
Real estate funds allow investors who do not have the
desire, knowledge or capital to buy land or property on their own to
participate in the income and long-term growth potential of real estate.
Although real estate mutual funds bring liquidity to a traditionally illiquid
asset class, naysayers on the use of these funds believe they are not
akin to direct investment in real estate. (For more insight, see The
Risks of Real Estate Sector Funds.)
Home Ownership
Many retail investors who have not considered real estate allocations
for their investment portfolios fail to realize that they may already be
investing in real estate by owning a home.
Not only do they already have real estate exposure, most are also
taking additional financial risk by having a home mortgage. For the
most part, this exposure has been beneficial and has helped many
people amass the capital required for retirement.
Conclusion
Although retail investors can and should take into account home
ownership when conducting their portfolio allocations, additional, more
liquid investments in real estate might also be considered. For those
with the requisite trading skills and capital,
REIT investing provides access to some of the benefits of real estate
investing without the need for direct ownership. For others considering
a smaller allocation or for those that do not want to be saddled by
asset selection but require maximum diversification, real estate
mutual funds would be an appropriate choice.
REITs came about in
1960, when Congress decided that smaller
investors should also be able to invest in large-scale,
income-producing real estate.
It determined that the best way to do this was the follow
the model of investing in other industries -- the purchase
of equity.
A company must distribute at
least 90 percent of its taxable
income to its shareholders each year to qualify as a
REIT. Most REITs pay out 100 percent of their taxable
income. In order to maintain its status as a pass-through
entity, a REIT deducts these dividends from its corporate
taxable income.
A pass-through entity does not have to pay corporate
federal or state income tax -- it passes the responsibility
of paying these taxes onto its shareholders. REITs cannot
pass tax losses through to investors, however.
From the 1880s to the 1930s, a similar provision was in
place that allowed investors to avoid double taxation --
paying taxes on both the corporate and individual level --
because trusts were not taxed at the corporate level if
income was distributed to beneficiaries.
This was reversed in the 1930s, when passive
investments were taxed at both the corporate level and
as part of individual income tax.
REIT proponents were unable to persuade legislation to
overturn this decision for 30 years. Because of the high
demand for real estate funds, President Eisenhower
signed the 1960 real estate investment trust tax provision
qualifying REITs as pass-through entities.
A corporation must meet several
other requirements to qualify as a REIT and
gain pass-through entity status. They must:
•Be structured as corporation, business trust, or similar
association
•Be managed by a board of
directors or trustees
•Offer fully transferable shares
•Have at least 100 shareholders
•Pay dividends of at least 90 percent of the REIT's taxable
income
•Have no more than 50 percent of
its shares held by five or fewer
individuals during the last half of each taxable year
•Hold at least 75 percent of total
investment assets in real estate
•Have no more than 20 percent of
its assets consist of stocks in taxable REIT
subsidiaries
•Derive at least 75 percent of gross income from rents or
mortgage interest
At least 95 percent of a REIT's gross income must come
from financial investments (in other words, it must pass
the 95-percent income test). These include include rents,
dividends, interest and capital gains.
In addition, at least 75 percent of
its income must come from
certain real estate sources (the 75-
percent income test), including rents from real property,
gains from the sale or other disposition of real property,
and income and gain derived from foreclosure of property.
We'll look at the different types of REITs next.
1960, when Congress decided that smaller
investors should also be able to invest in large-scale,
income-producing real estate.
It determined that the best way to do this was the follow
the model of investing in other industries -- the purchase
of equity.
A company must distribute at
least 90 percent of its taxable
income to its shareholders each year to qualify as a
REIT. Most REITs pay out 100 percent of their taxable
income. In order to maintain its status as a pass-through
entity, a REIT deducts these dividends from its corporate
taxable income.
A pass-through entity does not have to pay corporate
federal or state income tax -- it passes the responsibility
of paying these taxes onto its shareholders. REITs cannot
pass tax losses through to investors, however.
From the 1880s to the 1930s, a similar provision was in
place that allowed investors to avoid double taxation --
paying taxes on both the corporate and individual level --
because trusts were not taxed at the corporate level if
income was distributed to beneficiaries.
This was reversed in the 1930s, when passive
investments were taxed at both the corporate level and
as part of individual income tax.
REIT proponents were unable to persuade legislation to
overturn this decision for 30 years. Because of the high
demand for real estate funds, President Eisenhower
signed the 1960 real estate investment trust tax provision
qualifying REITs as pass-through entities.
A corporation must meet several
other requirements to qualify as a REIT and
gain pass-through entity status. They must:
•Be structured as corporation, business trust, or similar
association
•Be managed by a board of
directors or trustees
•Offer fully transferable shares
•Have at least 100 shareholders
•Pay dividends of at least 90 percent of the REIT's taxable
income
•Have no more than 50 percent of
its shares held by five or fewer
individuals during the last half of each taxable year
•Hold at least 75 percent of total
investment assets in real estate
•Have no more than 20 percent of
its assets consist of stocks in taxable REIT
subsidiaries
•Derive at least 75 percent of gross income from rents or
mortgage interest
At least 95 percent of a REIT's gross income must come
from financial investments (in other words, it must pass
the 95-percent income test). These include include rents,
dividends, interest and capital gains.
In addition, at least 75 percent of
its income must come from
certain real estate sources (the 75-
percent income test), including rents from real property,
gains from the sale or other disposition of real property,
and income and gain derived from foreclosure of property.
We'll look at the different types of REITs next.
REIT Modernization Act of 1999 - Invest Definition
A federal tax law change that allows a REIT to own up to
100 percent of the stock of a taxable REIT subsidiary that
provides services to REIT tenants and others.
The legislation also requires REITs to pay out 95 percent
of their taxable income, returning the payout level to the
one required from 1960 until 1980. From 1980 to 1999,
REITs only had to pay out 90 percent of their taxable
income.
A federal tax law change that allows a REIT to own up to
100 percent of the stock of a taxable REIT subsidiary that
provides services to REIT tenants and others.
The legislation also requires REITs to pay out 95 percent
of their taxable income, returning the payout level to the
one required from 1960 until 1980. From 1980 to 1999,
REITs only had to pay out 90 percent of their taxable
income.
WHY USE ANTONY AS
YOUR REALTOR
Real estate transactions involve one of the biggest
financial investments most people experience in their
lifetime.
1. As your REALTOR® I can help you determine your
buying power -- that is, your financial reserves plus your
borrowing capacity.
If you give a REALTOR® some basic information about
your available savings, income and current debt, he or she
can refer you to lenders best qualified to help you. Most
lenders -- banks and mortgage companies -- offer limited
choices.
2. As your REALTOR® I have many resources to assist you
in your home search. Sometimes the property you are
seeking is available but not actively advertised in the
market, and it will take some investigation by your agent to
find all available properties.
3. As your REALTOR® I can assist you in the selection
process by providing objective information about each
property.
Agents who are REALTORS® have access to a variety of
informational resources. REALTORS® can provide local
community information on utilities, zoning.
Schools, etc.
There are two things you'll want to know. First, will the
property provide the environment I want for a home or
investment? Second, will the property have resale value
when I am ready to sell?
4. As your REALTOR® I can help you negotiate. There are
myriad negotiating factors, including but not limited to
price, financing, terms, date of possession and often the
inclusion or exclusion of repairs and furnishings or
equipment.
The purchase agreement should provide a period of time
for you to complete appropriate inspections and
investigations of the property before you are bound to
complete the purchase. Your agent can advise you as to
which investigations and inspections are recommended
or required.
5. As your REALTOR® I can provide due diligence during
the evaluation of the property. Depending on the area and
property, this could include inspections for termites, dry
rot, asbestos, faulty structure, roof condition, septic tank
and well tests, just to name a few.
Your REALTOR® can assist you in finding qualified
responsible professionals to do most of these
investigations and provide you with written reports.
You will also want to see a preliminary report on the title of
the property. Title indicates ownership of property and can
be mired in confusing status of past owners or rights of
access. The title to most properties will have some
limitations; for example, easements (access rights) for
utilities. Your REALTOR®, title company or attorney can
help you resolve issues that might cause problems at a
later date.
6. As your REALTOR® I can help you in understanding
different financing options and in identifying qualified
lenders.
As your REALTOR® I can guide you through the closing
process and make sure everything flows together
smoothly.
8. When selling your home, your REALTOR® can give you
up-to-date information on what is happening in the
marketplace and the price, financing, terms and condition
of competing properties.
These are key factors in getting your property sold at the
best price, quickly and with minimum hassle.
9. As your REALTOR® I can market your property to other
real estate agents and the public. Often, your REALTOR®
can recommend repairs or cosmetic work that will
significantly enhance the salability of your property. Your
REALTOR® markets your property to other real estate
agents and the public.
In many markets across the country, over 50% of real
estate sales are cooperative sales; that is, a real estate
agent other than yours brings in the buyer.
Your REALTOR® acts as the marketing coordinator,
disbursing information about your property to other real
estate agents through a Multiple Listing Service or other
cooperative marketing networks, open houses for agents,
etc.
The REALTOR® Code of Ethics requires REALTORS® to
utilize these cooperative relationships when they benefit
their clients.
10. As your REALTOR® I will know when, where and how
to advertise your property. There is a misconception that
advertising sells real estate.
The NATIONAL ASSOCIATION OF REALTORS® studies
show that 82% of real estate sales are the result of agent
contacts through previous clients, referrals, friends,
family and personal contacts.
When a property is marketed with the help of your
REALTOR®, you do not have to allow strangers into your
home. Your REALTOR® will generally prescreen and
accompany qualified prospects through your property.
11. As your REALTOR® I can help you objectively evaluate
every buyer's proposal without compromising your
marketing position.
This initial agreement is only the beginning of a process of
appraisals, inspections and financing -- a lot of possible
pitfalls.
Your REALTOR® can help you write a legally binding,
win-win agreement that will be more likely to make it
through the process.
12. As your REALTOR® I can help close the sale of your
home. Between the initial sales agreement and closing (or
settlement), questions may arise. For example,
unexpected repairs are required to obtain financing or a
cloud in the title is discovered.
The required paperwork alone is overwhelming for most
sellers. Your REALTOR® is the best person to objectively
help you resolve these issues and move the transaction to
closing (or settlement).
YOUR REALTOR
Real estate transactions involve one of the biggest
financial investments most people experience in their
lifetime.
1. As your REALTOR® I can help you determine your
buying power -- that is, your financial reserves plus your
borrowing capacity.
If you give a REALTOR® some basic information about
your available savings, income and current debt, he or she
can refer you to lenders best qualified to help you. Most
lenders -- banks and mortgage companies -- offer limited
choices.
2. As your REALTOR® I have many resources to assist you
in your home search. Sometimes the property you are
seeking is available but not actively advertised in the
market, and it will take some investigation by your agent to
find all available properties.
3. As your REALTOR® I can assist you in the selection
process by providing objective information about each
property.
Agents who are REALTORS® have access to a variety of
informational resources. REALTORS® can provide local
community information on utilities, zoning.
Schools, etc.
There are two things you'll want to know. First, will the
property provide the environment I want for a home or
investment? Second, will the property have resale value
when I am ready to sell?
4. As your REALTOR® I can help you negotiate. There are
myriad negotiating factors, including but not limited to
price, financing, terms, date of possession and often the
inclusion or exclusion of repairs and furnishings or
equipment.
The purchase agreement should provide a period of time
for you to complete appropriate inspections and
investigations of the property before you are bound to
complete the purchase. Your agent can advise you as to
which investigations and inspections are recommended
or required.
5. As your REALTOR® I can provide due diligence during
the evaluation of the property. Depending on the area and
property, this could include inspections for termites, dry
rot, asbestos, faulty structure, roof condition, septic tank
and well tests, just to name a few.
Your REALTOR® can assist you in finding qualified
responsible professionals to do most of these
investigations and provide you with written reports.
You will also want to see a preliminary report on the title of
the property. Title indicates ownership of property and can
be mired in confusing status of past owners or rights of
access. The title to most properties will have some
limitations; for example, easements (access rights) for
utilities. Your REALTOR®, title company or attorney can
help you resolve issues that might cause problems at a
later date.
6. As your REALTOR® I can help you in understanding
different financing options and in identifying qualified
lenders.
As your REALTOR® I can guide you through the closing
process and make sure everything flows together
smoothly.
8. When selling your home, your REALTOR® can give you
up-to-date information on what is happening in the
marketplace and the price, financing, terms and condition
of competing properties.
These are key factors in getting your property sold at the
best price, quickly and with minimum hassle.
9. As your REALTOR® I can market your property to other
real estate agents and the public. Often, your REALTOR®
can recommend repairs or cosmetic work that will
significantly enhance the salability of your property. Your
REALTOR® markets your property to other real estate
agents and the public.
In many markets across the country, over 50% of real
estate sales are cooperative sales; that is, a real estate
agent other than yours brings in the buyer.
Your REALTOR® acts as the marketing coordinator,
disbursing information about your property to other real
estate agents through a Multiple Listing Service or other
cooperative marketing networks, open houses for agents,
etc.
The REALTOR® Code of Ethics requires REALTORS® to
utilize these cooperative relationships when they benefit
their clients.
10. As your REALTOR® I will know when, where and how
to advertise your property. There is a misconception that
advertising sells real estate.
The NATIONAL ASSOCIATION OF REALTORS® studies
show that 82% of real estate sales are the result of agent
contacts through previous clients, referrals, friends,
family and personal contacts.
When a property is marketed with the help of your
REALTOR®, you do not have to allow strangers into your
home. Your REALTOR® will generally prescreen and
accompany qualified prospects through your property.
11. As your REALTOR® I can help you objectively evaluate
every buyer's proposal without compromising your
marketing position.
This initial agreement is only the beginning of a process of
appraisals, inspections and financing -- a lot of possible
pitfalls.
Your REALTOR® can help you write a legally binding,
win-win agreement that will be more likely to make it
through the process.
12. As your REALTOR® I can help close the sale of your
home. Between the initial sales agreement and closing (or
settlement), questions may arise. For example,
unexpected repairs are required to obtain financing or a
cloud in the title is discovered.
The required paperwork alone is overwhelming for most
sellers. Your REALTOR® is the best person to objectively
help you resolve these issues and move the transaction to
closing (or settlement).
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IF YOU NEED HELP TO SELL YOUR PROPERTY;
PLEASE CALL ANTONY A PROFESSIONAL REALTOR.
AT: ---
F. Int. Realty. ----REAL ESTATE SERVICES-- HOME-BUYING --
REAL ESTATE INFO. MORTGAGE LOANS-
PLEASE CALL ANTONY A PROFESSIONAL REALTOR.
AT: ---
F. Int. Realty. ----REAL ESTATE SERVICES-- HOME-BUYING --
REAL ESTATE INFO. MORTGAGE LOANS-
| IF YOU NEED HELP TO SELL YOUR REAL ESTATE PROPERTY IN SOUTH FLORIDA; PLEASE CALL ANTONY A PROFESSIONAL REALTOR. AT: -- F. Int. Realty. -- - CLIENTS COMPLETE SATISFACTION GUARANTEED ! HOME-SELLING -- -' -REAL ESTATE SERVICES-- HOME-BUYING -- REAL ESTATE INFO.---- MORTGAGE LOANS INFO. -- ' 'INVESTMENT & FINANCE: METHODS, TECHNIQUES, AND STRATEGIES. WHERE, WHEN, HOW TO INVEST? --TIPS FOR HOME BUYERS -- Top 10 Home Buying Mistakes To Avoid-- |
| LISTING YOUR PROPERTY FOR SALE FAST & FOR THE TOP PRICE! ATTENTION HOME SELLERS: CALL A REALTOR AT: LET US HELP YOU SELLING YOUR PROPERTY. WITH US: IS MORE ADVERTISEMENT, MORE EXPOSURE, MORE SHOWINGS, MORE OFFERS, AND MORE MONEY FOR YOUR PROPERTY! CALL: --- SOUTH FLORIDA |
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Real Estate Investment Trust. A REIT is a type of
security that invests in real estate through
property or mortgages and often trades on major
exchanges like a stock.
This type of investment is liquid and they receive
special tax considerations.
money.usnews.com
security that invests in real estate through
property or mortgages and often trades on major
exchanges like a stock.
This type of investment is liquid and they receive
special tax considerations.
money.usnews.com
Real estate investment trust
A real estate investment trust (REIT) is a company that owns, and in most cases, operates
income-producing real estate.
REITs own many types of commercial real estate, ranging from office and apartment buildings to
warehouses, hospitals, shopping centers, malls, storage units, etc
A real estate investment trust (REIT) is a company that owns, and in most cases, operates
income-producing real estate.
REITs own many types of commercial real estate, ranging from office and apartment buildings to
warehouses, hospitals, shopping centers, malls, storage units, etc
Real Estate Investment Trusts
(REITs)
What are REITs?
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.
These may include office buildings, shopping malls,
apartments, hotels, resorts, self-storage facilities,
warehouses, and mortgages or loans.
Unlike other real estate companies, a REIT does not
develop real estate properties to resell them. Instead, a
REIT buys and develops properties primarily to operate
them as part of its own investment portfolio.
Why would somebody invest in
REITs?
REITs provide a way for individual investors to earn a
share of the income produced through commercial real
estate ownership – without actually having to go out and
buy commercial real estate.
What types of REITs are there?
Many REITs are registered with the SEC and are publicly
traded on a stock exchange. These are known as publicly
traded REITs. Others may be registered with the SEC but
are not publicly traded.
These are known as non- traded REITs (also known as
non-exchange traded REITs). This is one of the most
important distinctions among the various kinds of REITs.
Before investing in a REIT, you should understand
whether or not it is publicly traded, and how this could
affect the benefits and risks to you.
What are the benefits and risks of
REITs?
REITs offer a way to include real estate in one’s
investment portfolio. Additionally, some REITs may offer
higher dividend yields than some other investments.
But there are some risks, especially with non-exchange
traded REITs. Because they do not trade on a stock
exchange, non-traded REITs involve special risks:
(REITs)
What are REITs?
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.
These may include office buildings, shopping malls,
apartments, hotels, resorts, self-storage facilities,
warehouses, and mortgages or loans.
Unlike other real estate companies, a REIT does not
develop real estate properties to resell them. Instead, a
REIT buys and develops properties primarily to operate
them as part of its own investment portfolio.
Why would somebody invest in
REITs?
REITs provide a way for individual investors to earn a
share of the income produced through commercial real
estate ownership – without actually having to go out and
buy commercial real estate.
What types of REITs are there?
Many REITs are registered with the SEC and are publicly
traded on a stock exchange. These are known as publicly
traded REITs. Others may be registered with the SEC but
are not publicly traded.
These are known as non- traded REITs (also known as
non-exchange traded REITs). This is one of the most
important distinctions among the various kinds of REITs.
Before investing in a REIT, you should understand
whether or not it is publicly traded, and how this could
affect the benefits and risks to you.
What are the benefits and risks of
REITs?
REITs offer a way to include real estate in one’s
investment portfolio. Additionally, some REITs may offer
higher dividend yields than some other investments.
But there are some risks, especially with non-exchange
traded REITs. Because they do not trade on a stock
exchange, non-traded REITs involve special risks:
List of Public Non-Listed REITs..
American Realty Capital - Retail Centers of America, Inc.
American Realty Capital Daily Net Asset Value Trust, Inc.
American Realty Capital Hospitality Trust, Inc.
American Realty Capital New York City REIT, Inc.
Behringer Harvard Opportunity REIT I
Behringer Harvard Opportunity REIT II
Carey Watermark Investors Incorporated
Carter Validus Mission Critical REIT
CNL Healthcare Properties Inc.
CNL Lifestyle Properties, Inc.
Cole Credit Property Trust IV, Inc.
Cole Credit Property Trust V, Inc.
Cole Office & Industrial REIT
Cole Real Estate Income Strategy (Daily NAV), Inc.
Corporate Property Associates 17 - Global, Inc.
Corporate Property Associates 18 - Global
Dividend Capital Diversified Property Fund Inc.
First Capital Real Estate Trust, Inc.
Griffin Capital Essential Asset REIT, Inc.
Griffin-American Healthcare REIT III
GTJ REIT, Inc.
Healthcare Trust, Inc.
Hines Global REIT, Inc.
Hines Real Estate Investment Trust, Inc.
Industrial Property Trust
Inland Real Estate Income Trust, Inc.
InvenTrust Properties Corp.
Jones Lang LaSalle Income Property Trust, Inc.
KBS Growth & Income REIT, Inc.
KBS Legacy Partners Apartment REIT, Inc.
KBS Real Estate Investment Trust I, Inc.
KBS Real Estate Investment Trust II, Inc.
KBS Real Estate Investment Trust III
KBS Strategic Opportunity REIT II, Inc.
KBS Strategic Opportunity REIT, Inc.
Northstar Healthcare Income, Inc.
Northstar Real Estate Income II, Inc.
Northstar Real Estate Income Trust, Inc.
Phillips Edison Grocery Center REIT I, Inc.
Phillips Edison Grocery Center REIT II, Inc.
Realty Finance Trust, Inc.
RREEF Property Trust
Self Storage Group, Inc.
Steadfast Income REIT
Strategic Realty Trust Inc.
American Realty Capital - Retail Centers of America, Inc.
American Realty Capital Daily Net Asset Value Trust, Inc.
American Realty Capital Hospitality Trust, Inc.
American Realty Capital New York City REIT, Inc.
Behringer Harvard Opportunity REIT I
Behringer Harvard Opportunity REIT II
Carey Watermark Investors Incorporated
Carter Validus Mission Critical REIT
CNL Healthcare Properties Inc.
CNL Lifestyle Properties, Inc.
Cole Credit Property Trust IV, Inc.
Cole Credit Property Trust V, Inc.
Cole Office & Industrial REIT
Cole Real Estate Income Strategy (Daily NAV), Inc.
Corporate Property Associates 17 - Global, Inc.
Corporate Property Associates 18 - Global
Dividend Capital Diversified Property Fund Inc.
First Capital Real Estate Trust, Inc.
Griffin Capital Essential Asset REIT, Inc.
Griffin-American Healthcare REIT III
GTJ REIT, Inc.
Healthcare Trust, Inc.
Hines Global REIT, Inc.
Hines Real Estate Investment Trust, Inc.
Industrial Property Trust
Inland Real Estate Income Trust, Inc.
InvenTrust Properties Corp.
Jones Lang LaSalle Income Property Trust, Inc.
KBS Growth & Income REIT, Inc.
KBS Legacy Partners Apartment REIT, Inc.
KBS Real Estate Investment Trust I, Inc.
KBS Real Estate Investment Trust II, Inc.
KBS Real Estate Investment Trust III
KBS Strategic Opportunity REIT II, Inc.
KBS Strategic Opportunity REIT, Inc.
Northstar Healthcare Income, Inc.
Northstar Real Estate Income II, Inc.
Northstar Real Estate Income Trust, Inc.
Phillips Edison Grocery Center REIT I, Inc.
Phillips Edison Grocery Center REIT II, Inc.
Realty Finance Trust, Inc.
RREEF Property Trust
Self Storage Group, Inc.
Steadfast Income REIT
Strategic Realty Trust Inc.
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| WHAT TO ASK BEFORE BUYING A REAL ESTATE PROPERTY? Everyone wants a nice house, and one of the best ways to get that is buying a flipped house. It's an exciting time, because the home is either brand new or gently used. There are risks involved with buying a flipped home though. The repairs and renovations need to be done correctly. So before you buy be sure to ask these questions. Who's selling it? Is the seller a person or an LLC? Everyone needs to ask this question. It's happen that a renovator makes himself an LLC and right after the sale, he immediately liquidates the LLC. This is in hopes to get themselves off the hook in case any defects come up shortly after the sale. If the seller is an LLC, take some time to probe into how long the business has been around, and their reputation. Whats the scope of the renovation? This question will get the owner or agent talking. You'll find out if there were any walls removed, major plumbing or electrical work done. How long ago, etc. the smaller renovation jobs are usually bathroom jobs, new paint and floors, mostly cosmetic work. The bigger jobs are much bigger, and the new buyer needs to know what was done. Did they get permits? If there was any major electrical, plumbing, or structural work they need to have permits. Ask for a copy of them. You can also check the city records to see if permits were filed. If there aren't any permits this may mean the work could have been less than professional. Who was the last owner? There's always records of home ownership. If any issues are popping up, it's completely appropriate to ask the previous owner about them. Questions worth asking: when did you put on a new roof? Have there ever been any leaks anywhere? Has there always been this part of the home? It's important to know every change that was made in the house because flippers get in a hurry sometimes and don't finish certain jobs. How long has the house sat empty? If the home sits empty for a period of time, there's a chance it's been disrupted by either leaks, freezing pipes, vandals, and even rodents. If a house sits for a year or more after the renovation, it's entirely possible it's had water trouble in the basement. The seller may disguise this only when people start coming around. Can we go outside? Always check the outside areas for problems, because if you find one large enough it can save you huge dollars. Are there trees near the foundation? Has the pool ever had any problems? And how sturdy is the fence? Take your time and get yourself a licensed home inspector to check the place out. While all you see is a new home, the inspector can see the problem areas you don't. If you do find problems, it isn't time to walk away just yet. Just be ready to either ask for comps, repairs, or submit a lower offer. |
| Real Estate Lessons To Learn... Buying a home can be one of the biggest events in your life, so make sure it's one of the best choices you make. They can be pleasant experiences, or they can be complete disasters, or maybe somewhere in the middle. The best way to make sure you don't end up in the disaster category is by avoiding the most common life lessons among first-time home buyers. Clever staging? Or Excellent hiding? When homes are listed on the market they are staged as best as possible and are expecting multiple showings where potential buyers walk through and inspect the house. Buyers often see the home once or twice and commit to buying it. Once they've bought it and the stage is taken down they can see what they've really purchased. It's even recommended you walk along with the inspector and check everything they are looking at. Ask for receipts of new improvements or repairs. In the disaster case the staged home shows flawlessly, and you end up buying a POS. The lesson to learn here is to visit the home multiple times before you commit to buying it. Inspect the home each time and look for flaws you may have missed the previous visit. This will lessen the likelihood of buyer's remorse. The home is great but... Sometimes buyers will buy a home just for the home itself. It's important to choose the right home that is surrounded by the perfect neighbors, and community. If you don't fit in with your neighbors due to age differences, and the surrounding communities don't interest you, you'll wish you would have chosen a different place to call home. The lesson here is to look for all the amenities that you can, and will enjoy once you buy a certain house. Once you can see yourself living with in the community, you know that is the right house for you |
'' REIT's
There are a few things to keep in mind
when assessing any REIT. They include the
following:
REITs are true total-return investments. They
provide high dividend yields along with moderate long-term capital
appreciation.6 Look for companies that have done a good job
historically at providing both.
--------
Unlike traditional real estate, many REITs are traded on stock
exchanges. You get the diversification real estate provides without
being locked in long-term. Liquidity matters.
-------------
Depreciation tends to overstate an investment's decline in
property value. Thus, instead of using the payout ratio (what
dividend investors use) to assess a REIT, look at its funds from
operations (FFOs) instead.
This is defined as net income less the sale of any property in a
given year and depreciation. Simply take the dividend per share
and divide by the FFO per share.
The higher the yield the better.
Strong management makes a difference. Look for companies that
have been around for a while or at least possess a management
team with loads of experience.
---------------
Quality counts. Only invest in REITs with great properties and
tenants.
Consider buying a mutual fund or ETF that invests in REITs, and
leave the research and buying to the pros.
The federal government made it possible for investors to buy into
large-scale commercial real estate projects as far back as 1960.
However, only in the last decade have individual investors
embraced REITs.
There are a few things to keep in mind
when assessing any REIT. They include the
following:
REITs are true total-return investments. They
provide high dividend yields along with moderate long-term capital
appreciation.6 Look for companies that have done a good job
historically at providing both.
--------
Unlike traditional real estate, many REITs are traded on stock
exchanges. You get the diversification real estate provides without
being locked in long-term. Liquidity matters.
-------------
Depreciation tends to overstate an investment's decline in
property value. Thus, instead of using the payout ratio (what
dividend investors use) to assess a REIT, look at its funds from
operations (FFOs) instead.
This is defined as net income less the sale of any property in a
given year and depreciation. Simply take the dividend per share
and divide by the FFO per share.
The higher the yield the better.
Strong management makes a difference. Look for companies that
have been around for a while or at least possess a management
team with loads of experience.
---------------
Quality counts. Only invest in REITs with great properties and
tenants.
Consider buying a mutual fund or ETF that invests in REITs, and
leave the research and buying to the pros.
The federal government made it possible for investors to buy into
large-scale commercial real estate projects as far back as 1960.
However, only in the last decade have individual investors
embraced REITs.
