REITs were established by Congress in 1960 to provide all investors, especially small investors, access to income-producing real estate. Prior to REITs, only institutions and wealthy individuals could participate in private real estate syndications.<\/p>\n

A REIT is essentially a company that uses investor capital to acquire, develop, manage, and sell real estate assets. Most REITs specialize in a particular real estate sector such as apartments, retail centers, office buildings, hotels, storage facilities, data centers, cell phone towers, healthcare facilities, timberland, and more.<\/p>\n

Some key features of REITs include:<\/p>\n

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• REITs trade on major stock exchanges like stocks and provide liquidity for investors.<\/li>\n
• They must payout at least 90% of taxable income to shareholders annually in the form of dividends. This results in high dividend yields.<\/li>\n
• A diverse group of investors can invest in REITs with minimal starting capital.<\/li>\n
• REITs allow investors to gain exposure to real estate without having to directly buy, manage or finance properties.<\/li>\n
• They offer portfolio diversification and can reduce overall volatility. Real estate generally performs differently than stocks and bonds over time.<\/li>\n
• REITs must adhere to various rules around their asset holdings, revenue sources, amount of leverage, and corporate governance. This provides structure and oversight.<\/li>\n<\/ul>\n

  In short, REITs provide a way for individuals to earn income through real estate investment along with the benefits of diversification and professional management. Their substantial dividend payouts can provide investors with consistent monthly income.<\/p>\n

  <\/span>REIT Sectors<\/strong><\/span><\/h2>\n

  There are several distinct REIT sectors an investor can choose from. Each sector has its own risk\/return profile, dividend yield potential, and sensitivity to economic conditions. Some of the major REIT sectors include:<\/p>\n

  <\/span>Residential REITs<\/span><\/h3>\n

  Residential REITs own and operate residential rental properties including apartments, manufactured housing, single-family homes, student housing, and senior living facilities. These provide essential housing and generally see stable demand.<\/p>\n

  <\/span>Retail REITs<\/span><\/h3>\n

  Retail REITs own and manage retail rental properties including malls, shopping centers, outlet malls, and net lease properties leased to retail tenants. Performance is tied to consumer spending and the retail landscape.<\/p>