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REIT - Is it the Right Investment for You?

A real estate investment trust (REIT) is an investing corporation who focuses in real state. Established in 1960, the idea was to offer the public a financial instrument similar to mutual funds. While the focus of a mutual fund is stocks, the REIT focus is real estate.
Investing in REITs is an excellent choice for an investor, and should be considered when evaluating other possibilities.

What Are The Types of REITs?

Right now exists more than two hundred REITs in the USA, with an accumulated asset of US$ 475 billions. Almost one third of them have their shares traded in major stock exchanges, while others aren't interested in it and maintain a private situation. Right now you may find three kinds of REIT's:
Equity REIT's
In this kind of REIT's, the corporation buys, develops and manages real state properties and it doesn't own real state loans. Their revenue comes from the rents of their properties and it composes almost a 96% of all the available REITs.
Mortgage REIT's
A mortgage REIT is made by those corporations who buys and manages real state loans. It doesn't own real state properties and their source of revenue comes from the interest of their mortgage loans. Although it's not common, these type of corporations may originate their own loans.
Hybrid REIT's
They are a mix between equity REIT's and mortgage REIT's. In other words, it owns and manages real state loans and properties.

Besides these types, REIT's may specialize by geographical factors or industry sectors, or a mixture of both. The top three real state sectors in which REIT's are focused are offices or industrial property, residences and retail stores

Are There Any Tools For Evaluating REITs?

Yes, and thanks to the Internet you will be able to find a lot of them. Just put REIT tool in your favorite search engine and click on the search button. A word of advice, many of these tools are made for a professional REIT analyst so they may not be what you're are looking for.

If you're an average investor who doesn't want to spend hours making your own evaluations, then use the online rankings made by some financial web pages. For example, Forbes, who has a real estate investment trusts list. Another option is Dude help, where it ranks dozens of REIT's by their percentage increment in the last year.

Continue to: Benefits of Investing in REITs
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