Coming to terms: REITs
REITs are like mutual funds in some ways; they’re professionally managed organizations that pool the capital of many people in order to acquire or finance properties.
Q: What are REITs?
A: Real-estate investment trusts (REITs) are popular with many investors as they let you invest in real estate without actually buying any property.
Like mutual funds in some ways; they’re professionally managed organizations that pool the capital of many people in order to acquire or finance such properties as offices, hotels, apartments, shopping centers and medical centers.
Their portfolios are diversified and generally produce income. Many REITs trade publicly on major stock exchanges.
Corporations or trusts that qualify as REITs typically don’t pay corporate income tax and are often exempt from state income tax as well.
They must invest most of their assets in real estate and pay out at least 90 percent of their taxable income as dividends. In good years, REIT dividends can run quite high, sometimes topping 10 percent. Learn more at nareit.com.