A real estate investment trust is a device that permits you to invest in real estate and property but without the usually hassles associated with purchasing such property on your own.
A real estate investment trust is a system where a group of investors collectively gather their funds into a legal trust and invest in various forms of real estate. If you’ve ever heard of other investment mechanisms such as mutual funds, you’ll understand the way real estate investment trusts are supposed to work.
A real estate investment trust may also be known as a REIT and a REIT invests in different types of property. The different types of property that are invested in may be residential or commercial or even for leisure purposes.
Simple REITs may invest in property as a simple as an apartment block or as complex as a group of hotels and leisure parks. Some real estate investment trusts even own shopping centers and movie theatres and it all depends of the purposes of the people who initially set up the real estate investment trust.
Different types of REIT’s exist and some of these trusts are private in nature. A number of these real estate investment trusts are public and can be found on stock exchanges such as the NYSE and the London Stock Exchange. One form of real estate investment trust is the mortgage REIT, which provides a unique service in that it supplies new home owners with money in order to purchase new property. People may also invest in such devices in order to get loans and securities which are backed by these REITs and mortgages. As with any investment device, a certain form of risk is always involved and methods have been created to effectively handle these types of risk. The risks that are associated with a real estate investment trust will vary and can be dependent on a varied number of factors some of which include the location the investments are based in and other factors.
In recent times REITs have increased in popularity due to a different number of reasons. Some people prefer real estate investment trusts because they are associated with factors that they can easily understand. Some people prefer REITs because they are identified with development and growth. Others simply make investments for certain reasons which are often driven by emotional factors. Statistics have shown that some relations exist between the prices of stock and the prices of real estate and profitability of REITs may easily be determined by monitoring for such statistics and varying volatility of stock markets in a particular region.
If you want to invest in real estate but you have often been scared of the problems of tying down all your money in one particular investment, REITs make perfect sense for you. The increased popularity of these devices, the growth of demand for quality real estate on a global scale as well as the opening of new vistas for investment such as the economies of newer countries on the boom such as the UAE and the countries of the former Eastern Bloc of Europe show better times ahead for early investors.