Introduction to REITs

REITs (Real Estate Investment Trusts) let you invest in real estate without buying property. They own apartments, offices, malls, warehouses, and other properties.

What is a REIT?

• Companies that own income-producing properties
• Trade on stock exchanges like regular stocks
• Must distribute 90% of income as dividends

Types of REITs

• Equity REITs: Own and operate properties
• Mortgage REITs: Finance real estate
• Hybrid REITs: Combination of both
• Sector-specific: Healthcare, data centers, retail

Why Invest in REITs?

• High dividend yields (often 4-6%)
• Portfolio diversification from stocks
• Hedge against inflation
• Liquid real estate exposure

REIT Dividend Requirements

• Must pay out 90% of taxable income
• Creates reliable income stream
• Dividends taxed as ordinary income
• Best held in tax-advantaged accounts

Risks of REIT Investing

• Interest rate sensitivity
• Property market downturns
• Sector-specific risks
• Some use significant debt

How to Invest

The easiest way is through a REIT ETF for instant diversification across property types.