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Estate Investment Trust - REIT |
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These
sell like stocks on the major exchanges, and invest in real estate
either directly 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 invest in (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
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There are over 300 publicly traded REITs operating in the United States whose average daily dollar volume has more than quadrupled during the last three years, reaching over $260 million dollars. So basically they trade as stocks and offer big dividends.
The average dividend yield of a REIT is a modest 8%. Not bad eh?
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