How to Invest in Real Estate About Real Estate Real estate is a property consisting of land and the buildings on it as well as the natural resources of the land including uncultivated flora and fauna, farmed crops and livestock, water and minerals. Real Estate Investment Trusts A REIT is a special corporate organizational form, under the tax laws, invests in large-scale, income-producing real estate. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities and mortgages or loans. Instead, a REIT buys and develops properties primarily to operate them as part of its own investment portfolio. How to Understand the Market There are two main markets when dealing in real estate. One is Private real estate and the other is Public real estate. Private real estate: Manager would earn money on rent paid by tenants. This is a very direct way of investing in real estate. Owners are responsible for the property. Public real estate: Manager paid dividends as the trust collects rent and value from the multiple properties it owns. Owners are not responsible for the real estate. This is a less direct approach to investing. How to invest in property The four sectors in real estate investments are: public equity, public debt, private equity, and private debt. Public equity: If you choose public equity, you will want to look at investment trusts. Public debt: If you choose public debt, you should investigate mortgage securities, which are the debt equivalent of investment trusts, where various mortgages are bundled together to form a single investment. Private equity: If you select private equity, then you will most likely be purchasing residential or commercial property and acting as a landlord. Private debt: If you choose private debt, you will invest in private mortgages.
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.