Explanation:Similar to mutual funds, many investors pool their funds into a single piece of land property (schools, apartments, office parks, etc.) with the intention of increasing their returns as the property value increases. This structure allows each investor to be part of a larger investment that they wouldn’t have been able to afford on their own.The reason these are often compared to mutual funds is because Dwight D. Eisenhower created the REIT Title with the intention of mirroring the structure of mutual funds in order to stimulate the real estate industry. They are now widely used all over the world because they benefit the expansion of real estate while also providing returns to investors as rent is collected from those using the property.
In a nutshell:
- A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing properties.
- REITs generate a steady income stream for investors but offer little in the way of capital appreciation.
- Most REITs are publicly traded like stocks, which makes them highly liquid (unlike physical real estate investments).
- REITs invest in most real estate property types, including apartment buildings, cell towers, data centers, hotels, medical facilities, offices, retail centers, and warehouses.