Are REITs Good Investments?
Investing in REITs can be an attractive option for those looking to generate dividend income with limited funds available for real estate investments.
A real estate investment trust (REIT) is a company that generates income through property ownership, operation or financing. REITs work like mutual funds, pooling investments from multiple individuals. This allows investors to earn dividends from real estate without having to individually purchase, manage or finance the properties themselves.
In 1960, Congress created REITs as an amendment to the Cigar Excise Tax Extension. This provision enables regular investors to purchase shares in commercial real estate portfolios, which were previously only accessible to wealthy individuals and large financial intermediaries.
A REIT portfolio can consist of various types of properties such as apartment complexes, data centers, healthcare facilities, hotels, infrastructure (including fiber cables, cell towers, and energy pipelines), office buildings, retail centers, self-storage units, timberland, and warehouses.
Usually, REITs focus on a particular category of real estate. Nevertheless, certain diversified and specialty REITs may possess various property types in their collections…
