5 Types of REITs and How to Invest in Them

5 Types of REITS and How to Invest in Them?

Real estate investment trust or REIT is a preferred and growing investing option for financiers who want to extend their business beyond mutual funds and publicly traded company stocks. In simple words, you can describe it as a corporation that operates with real estate to make money. REIT assists the investor in managing the trade of high-value real estate investments and mortgages.

For example, REITs rent the property and collect a rental fee. Then the shareholders obtain the charges as income or dividends. But this is not all, as you can also explore several types of REITs. In the below segment, we will discuss the various types of REITs and information on how to invest in REITs.

1. Retail REITs

Retail REITs own and maintain retail businesses. It rents retail spaces to the tenants to make shopping malls, boutiques, grocery stores, and the list goes on. They make money by obtaining the monthly or annual payment from the renters. But when investing in retail REIT, an individual should know about the related industry and lease it to the verified tenant.

2.  Residential REITs

Residential REIT is an investment that owns and handles rental property like apartment buildings, manufactured and student housing, condominiums, vacation homes, and others. REITs are best for long-term investments. Several variables affect REIT prices if you invest in them for a short period. Besides, before investing in residential REITs, select the apartment in a central location where home availability is low. It will assist you in raising the money.

3. Healthcare REITs

It is related to the health system where the investors endow in hospitals, retirement homes, skilled nursing facilities, and medical centers. As the demand for the health system is regularly increasing, investing in a healthcare REIT is an intelligent choice. But before doing so, you should watch for a diversified group of tenants.

4. Office REITs

As the name suggests, it invests only in office foundations. From office parks and skyscrapers to government and biotech firms, office REITs involve everything. These are long-term investment plans, and you should pick a central location for this.

5. Mortgage REITs

It offers financing by purchasing mortgages and mortgage-backed securities. Mortgage REITs rely on multiple funding sources, which incorporate repurchasing the bonds, interchangeable and long-term debt, structured financing, and other credit options. It can raise debt and equity simultaneously.

 

Conclusion

So, these are the five types of REITs available in the market. Always select the variable depending on your capability. Besides, with little research, you can earn more from them as well.