Are Reits Suitable For You?

REIT is the acronym used for real-estate investment trust

. Revenues gleaned from rent and other fees compose the dividends given to stockholders who have invested in property-investment corporations. REITs really seem to zig when other stocks on NASDAQ zags and in general, they correspond negatively with the stock market. In the late 1990s, REITs took quite a beating, but they have rallied and flourished in the bear market started some ten years ago.

Congress first launched REITs back in 1960 as a way to provide small investors with the opportunity to invest and make money from large properties. Australia, Japan and Brazil are all familiar with REITs. REITs are reliant on the different laws of the various countries in which they are given and where additional real estate investment vehicles are also available.

Due to the fact that REITs give the most direct means to purchasing property and avoiding costly hassles, they are very appealing to individual real estate investors. As long as they give out at least 90% of taxable income to investors annually, dividends from REITs are exempt from federal tax. Dividends can amass 8 to 9% per year and they offer predictability almost unheard of on today's market.

The inspiration for the design of REITs was synonymous to investment structure afforded by mutual funds. Each shareholder is entitled to a prorated percentage of earnings. REIT stocks can be bought on most of the major stock exchanges. The deduction of dividends from taxable corporate revenues is permitted with REITs. Only those taxes involving dividends received and any capital gains should be reported by an individual investor.

In 2009, it was estimated that there were about 170 public REITs holding more than $300 billion US dollars. Often, these trusts concentrate on one specific type of property, such as residential or commercial. Handling the maintenance and management concerns are the focus of some REITs, but others are more detached and hire contractors to do these tasks.

by: Mary Barney

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