Different Categories of Equity REITs

Equity REITs are type of investment that allows you to get involved in the real estate market without actually buying any real estate directly. There are several different types of equity REITs that are available for you to invest in. Here are a few of the different categories of equity REITs on the market.

REIT

REIT stands for real estate investment trust. This is an organization that collects money from investors and uses it to buy real estate with. This is essentially like a mutual fund that uses real estate as the underlying security.

Residential

One popular type of REIT is one that invests in residential properties. This type of REIT is going to purchase apartment buildings, individual houses, and other types of multifamily units. The REIT is going to on the property and rent it out to individuals to live in. In some cases, they will have a management company do this for them or they might manage all of the properties internally. Many times, these types of REITs will get involved in markets that are hard for the average individual investor to get into. By combining the assets from many different investors, they can accumulate quite an amount of money to invest with. The danger with this type of REIT is that they will invest in an overcrowded residential real estate market.

Retail 

Another category that you could invest in is the retail REIT. This is a real estate investment trust that invests solely in retail property. Retail property can be very profitable because it typically has long-term tenants. If you get a good retail customer, you might not have to change tenants for 30 years. This can provide some very consistent profits for the REIT and the investors. With this type of REIT, you might to come a partial owner of a shopping mall or another type of retail center.

Office and Industrial

The office and industrial REIT is another option that you may have. This type of trust invest in properties that are used for office buildings or industrial businesses. This type of trust is desirable because it is usually very stable. Businesses that occupy office space do not typically move around from one place to another. Therefore, you can get some good tenants in the property and not have to worry about the investment for several years. The downside to long-term leases like this is that you are not going to be able to adjust to changes in market rent. If you need to raise the rent, you may have to wait until the lease expires at a date in the future.

Healthcare

Another popular type of REIT is the healthcare REIT. This type of investment trust uses their money to invest in medical properties. If you invest in this type of trust, you may be the partial owner of a hospital or a clinic of some type. This type of investment is very desirable because of the massive growth potential of the healthcare industry.

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