Real estate investment trusts (REITs) own, manage, or lend money for real estate. When you invest in a REIT, you get shares in a trust with a portfolio of properties. REITs offer greater liquidity, and most are traded on the major stock exchanges. They must also distribute at least 90% of their taxable income to shareholders.
What Are the Differences Between Residential and Commercial REITs?
REITs expose investors to real estate assets without having to buy, manage, or finance properties directly. Their shares trade like stocks on exchanges, allowing ordinary investors to access real estate portfolios indirectly.
Residential REITs invest in rental housing like apartment buildings, single-family rental homes, student housing, and older adult residences. They earn revenue primarily through rental income from occupants. Commercial REITs invest in properties leased to retail, office, industrial, and other business tenants. Revenue comes mostly from business lease agreements.
