Remember Me
forgot your password?

All You Need To Know About A Real Estate Investment Company

Real estate investment companies, known as RIETs or Real Estate Investment Trusts, are corporations that invest in real estate. The purpose of their existence is to acquire and profit from real estate investments. The biggest benefit for RIETs comes through statutory relief by way of reduction or elimination of corporate income tax. However, for this benefit RIETs have to distribute 90% of their annual taxable income excluding capital gains to their investor shareholders. This income may be taxable in the hands of the investor depending on the individual situation of the investor. To save tax the investor can hold real estate investments in his retirement account.

RIETs must also ensure that 75% of their assets are invested in real estate, equity in other RIETs, mortgage loans, government securities or cash. Out of the total gross income RIETs must derive a minimum of 75% from gains through sale of real estate, rents and mortgage interest. RIETs are required to have a minimum of 100 shareholders and less than 50% of outstanding shares should be held by five or less than five shareholders.

These companies can be either public companies or can be held privately.

Apart from tax benefits RIETs allow investors the advantages of professional management of real estate business including rental property. This is done by experts in the real estate field who are well versed with the functioning of the industry. With in-depth business understanding they are able to quickly decide how to take advantage of available opportunities and raise funds through capital markets if required.

Classification RIETs will place them basically in three categories of equity, mortgage or hybrid RIETs.

Equity RIETs are corporate entities whose activities include acquisition, building, renovation, management and sale of real estate. They specialize in ownership of specific building types like apartments, office buildings, regional malls, lodging facilities etc. They buy, own and manage real estate that is income producing. They develop and operate real estate as part of their portfolios not specifically targeting resale. They offer investors better avenues of long term investing as their dividend earnings are derived both from rental income and capital gains from real estate sales as well.

Mortgage RIETs on the other hand specialize in underwriting, acquisition and holding of debt obligations secured by real property. They essentially constitute loan portfolios as opposed to ownership of real estate and form less than 10% of RIETs. They are basically finance companies which use a number of hedging instruments for managing their interest rates and provide money loans to real estate owners for mortgages. They also buy current mortgages and securities backed by mortgages. The primary source of their revenues is the interest generated on mortgage loans. As their earnings are largely based on mortgage interest, these RIETs react faster to interest rate fluctuations that Equity RIETs. When there are chances of a drop in interest rates Mortgage RIETs offer a good chance of making speculative investment.

Hybrid RIETs are a combination of Equity RIETs and Mortgage RIETs. They own real estate property and also provide loans to real estate owners and operators to earn income in a combination of rental income and mortgage interest.

RIETs can be closed ended or open ended. Closed ended RIETs are allowed to issue shares on their own only once; additional shares can be issued only on approval by shareholders. Open-ended RIETs can issue and redeem shares as required by them at any time.

Title: Real Estate Investment Company

Written by: John Lall

Date Written: 0/28/2008

Reviewer Assigned by:

Reviewed by:

Quality Control:

Copyscape Results:

Webmaster Results:

Subheadings:

Common Error Check:

Spelling and Grammar:

Quality Control Completed on: Date

Quality control assured/ overseen by:

US Review by:

Date:

Charles Petty

Virtual Real Estate Investing Experts Kim and Charles Petty have been involved in over 700 real estate transactions in the last 9 years and are the creators of the Ultimate Turn Key Virtual Real Estate Investing Systems for investors all around the world who want to take advantage of the awesome profit opportunities in today’s real estate market. They are the worlds leading experts on Virtual Real Estate Investing.Go to http://www.VirtualRealEstateInvestingProfits.com or call 1-800-311-9228.

Rate this Article: 0 / 5 stars - 0 vote(s)
Print Email Re-Publish

Add new Comment



Captcha

  • Latest Real Estate Articles
  • More from Charles Petty

6 Steps to follow in order to purchase a home

By: Jasmine Jackson | 12/11/2009
A home buying process is quite complex as you need to consider a number of things in order to purchase a home of your choice. However, the process becomes quite simple and exciting if you know which steps to follow, one after the other. You can follow 6 essential steps involved in the entire home buying process - right from checking your credit score to arranging a home inspection, before buying a property.

NYC Apartment Rentals For Students And Out Of Towners

By: Terro White | 12/11/2009
With the advantage of the Internet New York apartment rentals have taken on a completely new format. There are comprehensive websites which include available apartment listings directly from the owners. An out of town client can simply register and pay the one-time membership fee to enjoy hassle free apartment rentals.

Place4U - UAE provide mutual fund schemes for investors

By: Kind Regard | 12/11/2009
We have always tries to give you best out of al. investment is the process where the investor wants maximum return, but higher risk higher return ,the investor wants low risk and high return. We understand that we have best schemes for the investors.

The foreclosure basics - Short Pay (section-I)

By: Jeff Adams | 12/11/2009
If we want to signup in the real estate market we should be aware of foreclosure short-sales. We may come across dozens and dozens of properties in foreclosure with small or no equity, that is, the vendor owes at close to or more than the property is worth.

Seven Hills Dallas Ga: Where Beauty and Placidity Assembles

By: Jason Cantrantz | 12/11/2009
There is a spot east of Los Angeles where beauty and Quiet Converges. It is an whole season heaven that furnishes unbounded beauty and recreational outlet, and it every Assembles here at seven hills dallas ga where their outside exacts the center stage. Beneath a Mountain and a Forest Consisting within the...

Hi-End New York City Apartments

By: Terro White | 12/11/2009
When looking for high-end New York City apartments for rent it is advisable to look at property developers. The main advantage for selecting properties constructed and managed by a real estate developer is that clients can have direct access to the entire portfolio of the developer. Most developers concentrate on delivering standardized services and since they maintain most of their properties for sale and rent these are maintained to the highest standards.

Comparing Life Insurance in Dallas Texas

By: Pinki Gupta | 12/11/2009
The expense of funeral besides other bills left behind is a proper toss around to acquire a Dallas deal Insurance policy.

Bed Tracking System and Return on Investment

By: Pinki Gupta | 12/11/2009
Unlike uncounted other forms of speculation, investing can actually be diverting and it is a great way to plan for your family's monetary future.

Virtual Real Estate Assistance

By: Charles Petty | 15/07/2009 | Real Estate
As an investor, it becomes very difficult to handle all the activities alone in real estate. You need to take care of all matters like legal, marketing, sales, purchases etc.

The Advantages Of Investing In Condominiums

By: Charles Petty | 14/07/2009 | Real Estate
Condominiums are often considered to be one of the good real estate investment options to build equity. You can buy a condominium either to live in or to rent it out.

Seized Real Estate

By: Charles Petty | 14/07/2009 | Real Estate
An increasing amount of properties end up at auctions that are organized by banks, state and federal governments due to various reasons, including the ongoing sub-prime crisis that has resulted in many borrowers defaulting on their mortgage payments.

Tips For Successfully Negotiating A Real Estate Deal

By: Charles Petty | 14/07/2009 | Real Estate
Negotiating can put you in trouble, if you don’t know the right way to speak up, when you make a deal. Being able to negotiate well will eventually turn your real estate deal into profits.

Residential Real Estate Investment

By: Charles Petty | 13/07/2009 | Real Estate
If you want to lay your roots in the real estate market, then concentrating on one particular field within this vast industry could help you to hone your strategy and not only carve out a niche, but also enable you to earn on your experience.

Residential Real Estate - A Good Investment

By: Charles Petty | 13/07/2009 | Real Estate
Investing in residential real estate can be done through equity REITs. Equity REITs own real estate including residential real estate and earn primarily from rentals and sale of real estate.

Real Estate Investment Training

By: Charles Petty | 13/07/2009 | Real Estate
If you enter into the real estate arena without any knowledge or training, then it could be compared to a boxer stepping into the professional ring without being trained.

Real Estate Investment Strategy

By: Charles Petty | 11/07/2009 | Real Estate
Real estate investing is serious business and can provide you with substantial returns to support a lavish lifestyle.

Submit Your Articles Free: Signup
Article Categories




Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2008 Free Articles by ArticlesBase.com, All rights reserved. (0.22, 5, w1)