Types of Real Estate Investment Trusts (REITs)

There are several types of Real Estate Investment Trusts (REITs) that investors can choose from, depending on their investment goals and risk tolerance. Here are some of the most common types of REITs:

  1. Equity REITs: Equity REITs invest in income-producing properties, such as apartments, office buildings, retail centers, and hotels. These REITs generate income through rental income and capital appreciation from the appreciation in the value of their properties.
  2. Mortgage REITs: Mortgage REITs invest in mortgages and mortgage-backed securities. These REITs generate income from the interest on the mortgages they hold. Mortgage REITs can be more volatile than equity REITs because they are more sensitive to changes in interest rates.
  3. Hybrid REITs: Hybrid REITs invest in both properties and mortgages. These REITs generate income from both rental income and interest income.
  4. Public Non-Traded REITs: Public non-traded REITs are not listed on a stock exchange and are sold through broker-dealers. These REITs typically have higher fees and are less liquid than publicly traded REITs.
  5. Private REITs: Private REITs are not publicly traded and are only available to accredited investors. These REITs are typically sold through private placement offerings.
  6. Sector-specific REITs: Sector-specific REITs focus on a specific type of real estate, such as healthcare facilities, industrial properties, or self-storage facilities. These REITs can provide more targeted exposure to a specific area of the real estate market.

In addition to these types of REITs, there are also international REITs that invest in real estate properties in other countries. International REITs can provide exposure to real estate markets that may not be available in the investor’s home country.

Investors should carefully consider the risks and potential rewards of each type of REIT before investing. Factors to consider include the type of properties or mortgages the REIT invests in, the track record and experience of the management team, and the fees and expenses associated with investing in the REIT.