Friday, February 27, 2009

Check Out REITs

About REITs: Real Estate Investment Trusts

Real Estate Investment Trusts (REITs) were created in the 60's so that all investors would have access to income-producing real estate through the purchase and sale of liquid securities. Before REITs were created access to investment returns of commercial real estate equity was only available to institutions and wealthy individuals.

For over half a century, REITs have become an important part of the United States economy and investment markets. United States REITs have grown from ninety billion dollars to over three hundred billion dollars in the past decade and they have gained popularity all over the world.

During their early years, mortgage Real Estate Investment Trust dominated the industry, providing debt financing for commercial or residential properties through investments in mortgages and mortgage-backed securities. Interest in equity REITs which own and manage commercial properties was limited because of the requirements that ownership and management of assets remain separate. This restriction was lifted with the passage of the Tax Reform Act of 1986 which allowed REITs to both own and manage properties. Now, more than 90% of publicly traded United States REITs are equity REITs that own and manage commercial real estate. Most of their income is derived from rents owned by companies across the nation.

There are certain guidelines and standards in place that must be followed in order for a company to qualify as a REIT in the US. The Internal Revenue Code requires at least seventy five percent of total assets be invested in real estate which realize at least seventy five percent of its gross income from rents from real property or interest from mortgages. They must also distribute at least ninety percent of taxable income to shareholders annually in the form of dividends.

Real Estate is a Wise Investment with REITs

Real Estate - The Wise Investment

In today's touchy economic climate many people want to be doing something to invest their money wisely, but are not sure how to do that. It seems every time you look at the business section all you see is more bad news about markets taking a tumble.

So, what is an investor to do? Well now may be a good time to take on an investment in something that is solid and has assets backing it up like Real Estate.

Sure, you're thinking that the real estate investment market has taken its share of hits. Yes, it has. But if you compare the hits it takes in a down market to the other mutual funds, stocks, bonds and options out there, you will see real estate is still the way to go.

For example, in one chunk of the market drop the regular stocks were down in a painful way. People then looked to see what the more stable commodities were doing. Even they were down. Utilities were down 4-5 percent. But at this same time real estate funds were down less than a percent. That should tell you something. Even when the rest of the investing building is crumbling, real estate is still a pretty strong corner stone.

Sure, some markets are still rather low for where most investors would like them to be, but if you look at this in a different way you may see the light.

While the funds may be low now, real estate is an asset. That means real estate will never completely lose it's valuable. That tangible piece of land or building will always retain some value. Therefore unlike the regular stock market where a bad day could wipe all of your money away, the real estate investing market will usually allow you to at least keep your investment, although you may not see as much profit as you would like.

How to Invest in Real Estate

The next thing you may be wondering is how to start getting invested in real estate. The first thing you need to do is your homework. You need to know what is best to invest in and how to get your money into those markets.

Begin by going to This is a website that is in the business of real estate investments and real estate investment trusts (REITs).

Unlike other brokerage firms that just want your money, they also want to make sure you know what you are getting into. The website is filled with information about REITs and the real estate market in general. This will give you a good base in the options that are out there and which ones you may want to consider purchasing.

Once you know which ones are the best to put into your portfolio, can take care of that part of the process as well, making the purchases for you.

After the purchase has been made, they will also help you keep up with your REITs and follow their progress in the weeks, months and years to come.