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What is a REIT?

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcRYBAHkwnarbu9LPlb2LxrGMWeav02EJTXNXcGneJmmLBFq_BZKREIT is the acronym for Real Estate Investment Trust. According to the National Institute of Real Estate Investment Trusts 190 Re Its are currently registered with the SEC and trade on one or more of the New York Stock Exchanges. There are over 900 REITS that are privately held companies.

The advantage to investors in the REIT is the source of income it provides. Specifically, due to the structure of the REIT it does not accrue corporate tax, instead it returns all of the taxable income to investors. The investor receives a 1099 form for tax purposes and it is therefore taxed like additional income.

The REIT can be designed to fit almost any scenario available in the real property world. It can play the upside and the downside and provide hybrid type coverage. Primarily the REIT is composed of commercial property including shopping malls, apartment complexes and income producing property. It also is packaged with residential real estate of a particular type. Continue reading