What is a REIT?
A REIT, or real estate investment trust, is an investment vehicle that is used as an alternative to purchasing a single piece of real estate.
Purchasing a property takes large amounts of time, effort, and money. If buying real estate on your own feels out of reach, a REIT allows you to be a shareholder in a company that owns many pieces of real estate. This eliminates the need to search for and manage a property, and also greatly reduces the financial commitment.
There are three major types of REITs, including equity, mortgage, and hybrid. Each offers unique benefits that are worth exploring if you are considering investing.
How do Commercial REITs Work?
Commercial REITs are companies that own income producing commercial properties. These types of REITs typically own real estate such as apartment buildings, shopping centers, hotels, hospitals, and corporate offices.
Most REITs focus on a specific type of property, however, some try to diversify their portfolio by owning several different subtypes of real estate. Diversification can help to reduce risk in the event that one sector of the real estate market performs poorly.
Overall, the company generates revenue by leasing its owned real estate to businesses in need. In turn, the REIT pays out a portion of its rental profits to the shareholders.
Your Investment Strategy
Depending on your investment strategy and your financial situation, a REIT may or may not be the right option for you. Consulting a real estate expert is the best first step to determine how you’d like to set up your investment portfolio.
Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.
We give out $250 gift cards for referrals that become our real estate clients.
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