There are so many different types of REITs. So, before we go into the different types, let’s first explore what a REIT actually is. REIT is actually an acronym for: Real Estate Investment Trust. This translates into an investment pool used by different groups of investors. The REIT is formed by a group of investors pooling their money, or funds, with each other, and then, using that pool (or REIT) for their investments.
Next, let’s examine what qualifications are needed to create a REIT. The first qualification is that there needs to be at least 100 different shareholders. Also, among these 100 investors, 5 or less of them are not able to hold over 50% of the individual shares during the course of the previous 6 months. This ensures a well-thought-out process and long-term plan for the REIT.
Buying into a REIT is easier than it seems. First, you simply use your stock account to buy shares. The profits made on the REIT’s investment are divided out to all the REIT investors. A lot of the time these dividends can be substantial.
Now, onto the different types of REITs, the different types of REITs can basically be split into two categories: smaller investment areas and larger investment areas. For smaller investments you’ll want to look into Residential and Mortgage REITs. For the larger real estate investments look into, the Office, Healthcare, or Retail REITs.