When it comes to investing, the beginner likely has heard of stocks and mutual funds, but there are a variety of other investment types that can make up a portfolio. In this “Investing 101” series, I’ll do my best to explain different investing opportunities as I understand them, and various things to know about each type of investment.
Today’s Investing 101: Real Estate Investment Trusts (REITs)
A REIT is a company that owns income-producing real estate. You can buy a REIT like a stock, but you’re really investing in property (or someone else’s mortgage.)
According to REIT.com, to qualify as a REIT a company must have most of its assets and income tied to real estate investment and distribute at least 90 percent of its taxable income to its shareholders annually. To qualify as a REIT, an entity must not be “closely held,” meaning, at any time during the last half of the taxable year, more than 50% in value of its outstanding stock cannot be owned, directly or indirectly, by or for not more than five individuals. Continue reading Investing 101: What are REITs?