I’ve been told to look into this as a safe investment. But I’m quite bad at understanding anything to do with stocks and trades.
How does it work and how does it make money?
In: Economics
REIT stands for Real Estate Investment Trust. It’s a company that owns and manages properties like apartment buildings, shopping malls, offices, or hotels.
Imagine you and your friends want to buy a big building, but it’s too expensive. Instead, you can buy a small part of a REIT. This way, many people can own a piece of many properties together.
REITs make money through:
-collecting rent from the people or businesses using their properties.
-after paying expenses, they share most of the profit with the people who own parts of the REIT (called shareholders).
-when the properties the REIT owns increase in value, the price of the REIT shares may also go up.
So, when you invest in a REIT, you generally earn money in two ways:
1. Through the shared profits (called dividends)
2. By selling your shares if the price goes up
It’s real estate, so not always a safe investment, especially considering commercial property crises and residential real estate being way overvalued currently. It was a better investment 5 years ago.
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