Category Archives: Law

Real Estate Investing Through REITs

Power and wealth are measured in terms of the amount of the land or buildings you owned. The 20th century saw the rise in the stock and real estate investing. This business still proves the most profitable business. Real estate investment trusts can be the easiest and convenient way for the beginners to earn a profit without any hazard.

This is the comprehensive guide for the beginners in Real Estate Investing. The first Real Estate Investing Trusts formed after the passing of Real Estate Investment Trust Act 1960. The act had some drawbacks. It required the executives in charge for hiring a third party. It requires to hire a third person to provide management and property leasing service. In the next act Tax Reform Act 1986 these restrictions were waived off. After 13 years the Real Estate Investment Trust’s modernization act was passed.The 1999 law allows Real Estate Investment Trusts to form taxable subsidiaries in order to provide specialized services to tenants.

Requirements for Real Estate Investment Trusts Status.

Every real estate investor who invests in Real Estate Investment Trusts should have passed these 4 tests. In order to retain its special tax status.

  1. The Real Estate Investment Trust investors should distribute almost 90% of their annual taxable income, except capital gains.
  2. The Real Estate Investment Trust investors should have invested its 75% assets in real estate, mortgage loans and shares.
  3. The Real Estate Investment Trust investors should derive their rental income and gains from the sales at least 75%. 95% of the gain should come from dividends, interest, mortgage interests and securities sales.
  4. The Real Estate Investment Trust investors should have 100 shareholders almost. The significant thing is you should have less than 50% outstanding shares.

In order to avoid double taxation, Real Estate Investment Trusts offer some other benefits which are:

Professional Management.

Real Estate Investment Trusts allow you to hire a professional and experienced manager to manage your property. Professional management is a compulsory factor. You do not have to manage all alone. You can hire a professional and experienced manager.

Decrease the level of Personal Risk.
Real Estate Investment Trusts can decrease your personal risk. In simple investment you need a huge amount of capital to invest. For that you have to borrow loans from different people and banks. But in Real Estate Investment Trustsyou can start investing from very few dollars. That decreases the level of personal risk.

In Real Estate Investment Trusts you have daily price quotation unlike traditional real estate investment. REITs offer you liquidity of your assets. Despite the fact, that the quoted price in Real Estate Investments may fluctuate daily. It is the safest investment, unlike conventional investment.

Some Excellent Tips for Retirement or Income for Living Expenses.
Real Estate Investment Trusts are suitable for the people who are getting retire soon or has been retired. They can seek best investment real estate investment trusts. Real estate investment trusts can give potential income and return on capital to the retired people. They can earn by investing just and earn money by just sitting at home.

This could be beneficial for them.This investment will be helpful for the retired people in bearing their living expenses. Real Estate Investment Trusts can give you greater stability in times of market crises. The term equity Real estate investment trusts refer to a corporate entity. It is involved in the acquisition, management, building, renovation, and sale of real estate.Equity Real estate investment trusts generally operate in a specific area of expertise.

Some examples in which you can invest are:

  • Residential Real Estate Investment Trusts.
  • Retail Real Estate Investment Trusts.
  • Office and Industrial Real Estate Investment Trusts.
  • Healthcare Real Estate Investment Trusts.
  • Self-storage Real Estate Investment Trusts.
  • Hotels and resort Real Estate Investment Trusts.