I’ll try to keep this plain and simple that even a 5th grader could understand. REIT stands for real estate investment trust. It’s a corporation that allows several different people to put money together to buy real estate property, equities, and mortgages, and distributes 90% of it’s income to avoid paying corporate income taxes.
Why REITS are Great Investments
The tax benefit from less money being taxed can be substantial. Instead of paying a 35% corporate income tax, the income is spread out to each shareholder and taxed at his or her personal rate. So if the average shareholder has a personal income tax rate of 22%, that’s 13% less going to Uncle Sam.
REITS also provide an investor a good source of income while appreciating in value. Because a REIT has to distribute 90% of its income to shareholders, a REIT investor receives quarterly dividends. On top of that, the value of the REIT typically goes up as assets become more valuable. Publicly traded REITS have consistently outperformed the S&P 500 stock.ly/3jtheq and continue to do so stock.ly/4n33rf.
Different types of REITS
Diversified – Top 5: NLY, PCL, DRE, RYN, MFA
Healthcare Facilities – Top 5: HCP, VTR, HCN, NHP, OHI
Hotel/Motel – Top 5: HST, LHO, DRH, SHO, AHT
Industrial – Top 5: PSA, PLD, DLR, AMB, ARE
Office – Top 5: BXP, DRY, PDM, CLI, OFC
Residential – Top 5: EQR, AVB, UDR, ESS, CPT
Retail – Top 5: SPG, KIM, MAC, FRT, SLG
Property Management – Top 5: VNO, BPO, CBG, IEP, CIMStay tuned ’til my next blog about REITS