REITs investment or Real Estate Investment Trusts are now fast becoming popular as a form of investment. Nowadays, renting a place has become the trend. Rather than putting up their own buildings, businesses prefer to rent a building instead of buying their own property. This way, if ever they need to close shop, they do not have to worry about how to pay for the mortgage of their property or how to dispose of it.
There are 5 basic types of real estate investment trust.
Health care REITs. These are facilities intended for the health care sector. These include nursing facilities. hospitals, retirement homes, and medical centers. Income from these structures will largely come from payments of occupants, reimbursements coming from the health care system, and private payments. This type of trust investment will be affected by how the health care system of a certain country works. For example, a problematic Medicare system can make collecting rentals difficult. Having an idea with regards to the future health needs of the population will guide investors on where to put their money. For example, in a country with majority of its population getting old, investing in retirement homes will be a logical choice considering that there will be a need for homes for the aged.
Retail REITs. The retail business has been booming in the last few years and most of these businesses rent their store space from investors on real estate property designed to accommodate the needs of retailers. Companies that have this kind of trust investment get their revenues from the business owners who rent their stalls and store spaces. Accepting tenants who are engaged in selling basic commodities such as department stores will be less risky because they will have a steady flow of customers regardless of any economic situations.
Residential REITs. This REITs investment includes apartment units for several families and pre-fabricated homes. Income is generated from rentals paid by the occupants. One of the factors that must be considered when investing in residential units is housing cost in a certain area. When building houses could cost a lot, people would prefer to rent because not too many can afford to build their own homes. In these places, the cost of renting for several years can still be cheaper than building a house and occupying it for the same number of years.
Office REITs. This is a real estate investment trust that focuses on buildings that can be converted into offices. Many organizations prefer to rent office spaces rather than build their own building. One reason why renting is preferred is that agencies or organizations occupying these offices is the fact that the offices can be relocated somewhere else or they could close down due to an unhealthy business.
M&L development these days the hotel where you are staying could be owned by an REIT rather than by an individual owner. As the tourism industry booms, so does the number of people who stay in hotels increases. Hospitality REITs earn from hotels rentals and people who run the hotel get money from customers who stay in the hotel. As long as tourism is at its peak, making this kind of investment will be profitable.