Real Estate Investment Trusts (REITs) are investment vehicles that allow individuals to invest in real estate without owning physical properties. They’re structured as corporations or trusts, owning and managing income-producing real estate assets like office buildings, apartments, or shopping centres.
Benefits: REITs offer diversification, regular income through dividends, and the potential for capital appreciation. They are liquid investments, traded on stock exchanges. Investors can benefit from professional management and pass-through tax benefits, as REITs must distribute at least 90% of taxable income to shareholders.
Risks: Market fluctuations can affect REIT prices. Economic downturns impact rental income. Interest rate changes affect financing costs. Poor management decisions can hurt performance. As with any investment, thorough research is crucial.