Real Estate Investment Trusts (REITs)
Definition of "Real estate investment trusts (REITs)"
Type of investment company that invests money in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive income from the rents received from the properties and receive capital gains as properties are sold at a profit. REITs have been formed by a number of large financial institutions such as banks and insurance companies. The stocks of many of them are traded on security exchanges, thereby providing investors with a marketable interest in real estate investment portfolio. By law, REITs have to distribute 95 percent of their income to shareholders, and in turn they are exempt from corporate taxes on income or gains. In exchange for this special tax treatment, REITs are subject to numerous qualifications and limitations including:
- Qualified asset and income tests. REITs are required to have at least 75% of their value represented by qualified real estate assets and to earn at least 75% of their income from real estate investments.
- Shareholder qualifications. Generally, REITs are not permitted to be closely held and must have a minimum of 100 shareholders.
Popular Real Estate Terms
refusal of one party to a contract to carrying out his or her responsibilities under the agreement. An example is when a builder refuses to perform previously agreed services for the buyer ...
(1) Surrendering voluntarily or involuntarily ownership of property or an interest therein. (2) Court order to give up possession or the right to property such as in the case of an ...
Offer to buy real estate provided certain conditions are met. ...
Legal document that conveys real estate to the lender after the borrower defaults on his or her mortgage payments. The borrower should demand cancellation of the unpaid balance and a ...
Federal government agency monitoring and regulating corporate financial reporting and disclosure, use of accounting principles, auditing practices, and trading activities. Its regulations ...
An equity-to-value ratio is an excellent tool for those homebuyers that want to understand how profitable an investment is based on the amount of money invested and the actual value of the ...
The operating expenses definition is the sum of costs or expenses a company deals to operate as a business. The term operating expenses is used in any business field and is commonly ...
Mortgage loan not insured or guaranteed by a governmental agency such as the Federal Home Administration or the Veterans Administration. This type of loan is repayable in fixed monthly ...
Suppose you’re fascinated with making “easy” money with real estate. In that case, wholesale or wholesaling real estate might be your cup of tea. But what is wholesale ...
Have a question or comment?
We're here to help.