All you want to know about REITs and its types

Before exploring the reasons to invest in REITs, let us first understand the basics of REIT and its types.

All you want to know about REITs and its types

Everybody wants to lead a comfortable life with a good lifestyle, but few persons are fortunate enough to manage the life as they wish.

If you aspire to have a better living, you need to plan you investments. There are different investment avenues, and one such option is REIT or Real Estate Investment Trust.

Before exploring the reasons to invest in REITs, let us first understand the basics of REIT and its types.

According to India Infoline, REIT which stands for Real Estate Investment Trust is similar to that of a mutual fund, but instead of investing in stocks or bonds, it tends to invest in the real estate.

"The trust owns, operates or even finances income-producing real estate as per their needs. These like other securities trades on major stock exchanges and provide liquid stakes in real estate to the investors," India Infoline adds.

There are two types of REITs namely, Equity REITs and Mortgage REITs:

Equity REITs: This type of REITs own large commercial buildings, retails storefronts, hotels, or apartment buildings. The returns are earned by giving these buildings on lease and subsequently dividends are paid to the investors.

Mortgage REITs: This type of REITs do not own the properties themselves, but the debt on the properties. These own mortgages against the properties and collect payments.

India Infoline cites few reasons to invest in REITs, as it finds investing in REITs can be a very fruitful and beneficial investment for you.

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