Real Estate Investment Trust (REIT)
REIT stands for Real Estate Investment Trust. A REIT invests directly in real estate, either through properties or mortgages, and is traded as a security on a stock exchange. REITs tend to offer investors high yields, and they receive special tax considerations.
- Equity REITs invest in and own properties. Revenue comes principally from their properties' rents.
- Mortgage REITs deal invest in property mortgages. They lend money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Revenues come primarily from the interest that they earn on the mortgage loans.
- Hybrid REITs invest in both properties and mortgages.