Here is the essence of real estate investment trusts -- unless you're flying through the air or on (or in) a large body of water, you're occupying what's called "real estate." It included all kinds of buildings, the land they're on, and land without buildings. That is, nature -- both undeveloped wilderness and farmland or cultured woods.

REITs started in the U.S. as a 1960 law, The Real Estate Investment Trust Act of 1960, because Congress wanted to give small investors a chance to profit from commercial real estate as wealthy individuals and institutions have traditionally done. The first one was set up in 1963. It allowed investors to pool their money to acquire ownership interest in real estate properties, without having to own real estate directly -- especially commercial real estate.

Until then, individuals had to own real estate directly. However, it could be difficult for them to raise enough money to buy a second house or apartment building. Plus, those who did so needed a variety of skills to make the investment profitable, and they were still at risk from business conditions in their local area. Not to mention having to fix toilets at 2 o'clock in the morning.

So far as I can tell, this U.S. law was the first in the world. Since then, the REIT concept with variations had spread throughout the world: REITs can be found in Canada, the U.K., Belgium, France, The Netherlands, Australia, Germany, Japan, Singapore, Hong Kong, Bulgaria, India, and others.

There are now about 190 real estate public securities registered in the U.S.

You can buy shares in private REITs which are sponsored by various real estate businesses and sold to investors by financial planners. However, they are not liquid, because they're not traded on an exchange. They carry large commissions (publicly traded REIT shares are available from deep discount online brokers). Plus, the sponsors also make big money from fees.

There are three types of REIT investments:

Equity REITs -- These REITs are actually in the real estate business. They buy, develop, manage and sell commercial properties. Most real estate investment companies are of this type, and they're what most people mean when they speak or write about real estate investment trusts REITs.

Mortgage -- Mortgage real estate investment trusts make their money by making mortgage loans and investing in them. With the current U.S. subprime mortgage loan disaster threatening to throw the entire country (and possibly the world) into a recession, you'd probably better think twice (and a third time, and a fourth time if you still feel tempted), before buying shares of one of these. Only about 10% of U.S. REITs are of this type.

Hybrid -- a handful of real estate investment companies both manage commercial real estate and make mortgage loans, so they're known as hybrids of the two main types.

Some real estate companies have chosen be publicly traded companies, or C corporations, but not to elect the tax status of REITs. These are known as real estate operating companies, or REOCs. Therefore, a REOC is not required to pay any dividends, just like other companies listed on a stock exchange. Therefore, the share price of a real estate operating company is more volatile, because there's no immediate reward for investors.

Click to watch brief (30 second), exciting video on finding financial freedom through investing for income . . .

Now experience for yourself the joy of securing your retirement through income investing!

Want more income -- now or when you retire? Get your free eCourse:

Learn the Secrets of Investors Who Make Money in Both Bull and Bear Markets . . . Good Times and Bad!

Before the subprime mortgage mess makes stock market goes down more . . . before the stock market goes up, making dividend paying stocks more expensive . . . before the rising cost of gas, gold and food -- and the sinking U.S. dollar -- put the world into a recession . . . before retiring baby boomers start selling off their growth stocks . . . before you need investment income just to eat!

  

7 Reasons to Invest for Income -- NOW More Than Ever

Rick Stooker

• The greatest secret to income investing (Einstein called it "The most powerful force in the universe")

• What -- historically -- gives stock market investors 1/2 of their total returns (from 1929-1954; 1966-1981; and 1999-mid-2008 it was the ONLY way to make money from the stock market!)

• How to avoid suffering from accounting fraud. Automatically keeps you from throwing you money away on future Enrons, Tycos, and WorldComs

It's easy. Just enter your first name and email address into the form below.

(NOTE: I greatly respect your privacy. I will never sell, rent, share or give away your email address to anyone. There is no obligation. You can unsubscribe at any time. After you click the button, you'll be taken to a page to thank you.)

Or, you can subscribe to the 7 Reasons to Invest for Income Now More Than Ever RSS feed. Just click on the orange RSS feed icon below:

Disclaimer:

I am not a financial advisor. I am not a broker. I am not a financial planner.

I have no professional licenses.

I am a wide reader and an independent thinker and this site gives my opinions on the subject of income investing.

Nothing in this site is to be construed as professional advice.

I am not responsible for the results of your investment decisions.

Past results are no guarantee of future returns.

You must read, think over what I say, make your own investment decisions and take responsibility for your own life, including the results of your investment decisions.

Continuing to stay on this site implies your acceptance of these terms.

Income Investing Site Full Website Agreement

Fixed Income Investments

Growth Income Investments

Why Income Investing