Real Estate Investment Trust - REIT Investment in India | Best Real Investment Options | Josh Money
Welcome to Josh Money! In this video of Josh Money, Aastha Sethi is talking about REIT - Real Estate Investment Trusts. What Is a Real Estate Investment Trust (REIT)? A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. Modelled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves. Most REITs have a straightforward business model: The REIT leases space and collects rents on the properties, then distributes that income as dividends to shareholders. Mortgage REITs don't own real estate, but finance real estate, instead. These REITs earn income from the interest on their investments.
To qualify as a REIT, a company must comply with certain provisions in the Internal Revenue Code (IRC). These requirements include primarily owning income-generating real estate for the long term and distributing income to shareholders. Specifically, a company must meet the following requirements to qualify as a REIT:
Invest at least 75% of total assets in real estate, cash, or U.S. Treasuries Derive at least 75% of gross income from rents, interest on mortgages that finance the real property, or real estate sales Pay a minimum of 90% of taxable income in the form of shareholder dividends each year Be an entity that's taxable as a corporation Be managed by a board of directors or trustees Have at least 100 shareholders after its first year of existence Have no more than 50% of its shares held by five or fewer individuals
