A Real Estate Investment Trust (REIT) is basically an organization that owns and operates real estate for income. These companies own virtually all kinds of commercial real estate, from residential apartments, commercial buildings or office spaces, hotels, shopping malls, hospitals, and timberlands. Many REITs also specialize in real estate financing. They get special tax privileges and provide investors with high yields by educating them on highly liquid methods of making lucrative real estate investments.
There are three major types of REITs –Mortgage REITs, Equity REITs, and Hybrid REITs. Equity REITs are engaged in investing in and owning properties. Rent on properties is their main source of revenues. Mortgage REITs, on the other hand, deal in ownership and investment of property mortgages. They loan money for mortgage and the generate revenues by the interest on loans. Hybrid REITs practice the investment policies of both Mortgage and Equity REITs.