When investing in Real Estate Investment Trusts (REITs) investors have a choice between equity REITs, mortgage REITs, and hybrid REITs. Equity REITs invest in income-producing properties, and have a hand in building and renovating such properties.
Mortgage REITs get income from the repayment of mortgage loans, and they can acquire interest in mortgages on the market or finance the mortgages from the beginning.
Hybrid REITs are a blend of equity and mortgage REITs. Equity REITs are the most popular of these options, partially because mortgage REITs tend to be riskier.
REITs are mostly sought after for their high dividend yield, which results from regulations which stipulate that REITs must distribute 90% of their revenue to shareholders each year, and investors can choose to reinvest their distributions back into the REIT.
REITs are generally publicly traded and offer investors an opportunity to invest across real estate types with relatively low initial investments.
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