Investing in Real Estate

Question: What is a REIT?

Answer: A real estate investment trust, or REIT, invests primarily in income-producing real estate or makes loans to persons involved in the real estate industry.

There are several types of REITs:

• Equity REITs buy real estate, and investors receive income from the rents received and from any profits on the sale of its properties.
• Mortgage REITs lend money to building developers and other real estate companies and receive income from interest paid on those loans.
• Hybrid REITs engage in both owning real estate and making loans.

Douglas C. Lockwood, BS, MBA, JD, CFP writes for American Century Investments. Visit American Century's Education & Planning site for information about mutual funds investing in REITs and other ways to diversify your portfolio.

This information is for educational purposes only and is not intended as investment advice.

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Is a REIT a safe investment?

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