Real Estate Investment Trusts (REITs) are similar to mutual funds but for real estate. Instead of buying buildings directly, investors gain exposure to real estate.
## Types of REITs
– **Equity REITs:** The most common type.
– **Mortgage REITs:** Earn interest payments.
– **Hybrid REITs:** Mix of income sources.
## Why investors choose REITs
– High dividends: By law, REITs pay out 90% of taxable income.
– Hedges against inflation.
– Accessibility: Investors can buy coca cola europacific partners shares REIT shares like stocks.
## Examples of REITs
– Steady income from retail tenants.
– Prologis: warehouses and logistics centers.
– Public Storage: leader in self-storage facilities.
## Risks of REITs
– Rising rates reduce borrowing power.
– Sector-specific risks.
– Economic downturns reduce rental income.
**Conclusion**
REITs are a bridge between real estate and stock markets. By combining high dividends and diversification, they offer growth and stability.
