Understanding REITs

What was the primary reason for the creation of REITs?

• To make real estate investing accessible to individual investors

• To eliminate the need for partnerships in real estate

• To increase government control over real estate

• To allow only wealthy investors to invest in real estate

How do investors participate in the gains and losses of a REIT?

• By directly owning real estate properties

• By buying shares of the REIT

• By joining a real estate partnership

• By investing in real estate mutual funds

What is the main source of revenue for the XYZ strip malls REIT?

• Collecting rent from stores

• Issuing new shares

• Borrowing money from banks

• Selling real estate properties

What is a potential risk of using leverage in a REIT?

• Lower property values

• Higher interest rate risk

• Decreased rental income

• Increased property maintenance costs

What percentage of their taxable income are REITs required to pay as dividends in the United States?

• 100%

• 50%

• 70%

• 90%