Real Estate Investment Trusts (REITS)

There are three basic types of REITS

1. The Equity Reit - This type of Reit is similar to a mutal fund except the investors own an interest in the real estate that the organization has acquired or acquired. The form of ownership is similar to a corporation, and the income and losses are treated, for the investor, as though this were individual owns a percentage of the transaction. With an Equity REIT the reit invests in office buildings, shopping centeres, and other commercial real estate. It also takes part in joint ventures, develops, builds, and otherwide is involved in many of real estate financing. 

2. The Mortgage REIT.. This form of real estate trust is deisgned for lending. These types of REITS are in the lending business. These REIts got into trouble in the 1970's by begin overly zealous with their lending practices. Many of these loans went bad and they ended up owning the property through foreclosures. Some of the REITs also found themselves in trouble after they made construction loasn on projects that failed prior the project paying off the REIT. 

3. The Hybrid Reit. This a mixture of two earlier formss of REITS. They are also make up the majority of REITs. Hybrids generally participate in the project, lending money and taking a percentage of the ownersship or override on income. 

REITs all into the same category as insurance companies in that they are a major sources for funds, but their access is generally remote and distant unless you are a major borrower or developer. But the real estate investor should keep them in mind, because when they are ready to lend the money is available.