Understanding REITs - How Real Estate Mutual Funds Work

Understanding REITs - How Real Estate Mutual Funds Work
by: Robert Shumake



If you are new to the world of investing, you probably have a lot of
questions about how it all works. What's the difference between stocks,
bonds, and mutual funds? What really is happening in the stock market and
which investments are the wise ones to make? Here's a look at the smart
side of investing as well as a deeper look into the world of real estate
mutual funds.

First, it is wise to understand what real estate mutual funds are. Real
estate mutual funds are essentially portfolios where shares of a variety
of stocks and bonds are purchased and put in one package that you can
then purchase shares of. In the case of real estate mutual funds you are
purchasing shares of stocks and bonds that are specifically in the real
estate arena.

There are two types of mutual funds – open and closed-end mutual funds.
Open-end mutual funds are those that can grow and have unlimited numbers
of shares. The way it works is, as new shareholders want to buy in, the
fund will purchase more and more shares of the assets inside of it. On
the other hand, closed end funds have a set number of shares when they go
up for an IPO. Once those shares are purchased someone has to sell shares
in order for someone else to be able to buy into the fund.

A similar item to purchase is real estate investment trusts, also known
as REITs. These generally are shares in particular real estate interests.
This could mean that you are purchasing shares into a series of apartment
complexes, condos or commercial properties. Your shares in this case are
used to purchase property, maintain it and then profit from it. The
profits that come from the REITs are mostly given back to the
shareholders in the form of dividends. At least 90 percent of the profit
must be returned to shareholders.

If you are pretty sure you want to purchase real estate mutual funds, you
may be wondering where you should purchase them and when? No one wants to
buy into something just to have it drop.

When it comes to the where of purchasing, consider a brokerage firm that
is only focused on real estate mutual funds and REITS. REITBuyer.com is
one such company. They are the only site that just does REITs and real
estate mutual funds. As an online brokerage that specializes in REITs and
real estate mutual funds, you know they will have the type of focus and
attention to detail on the investments you are planning to sink your
money into. The more the brokerage knows about these things, the more you
can learn about them, meaning you can make much wiser investments.

As for the when of buying into real estate mutual funds, this is the
perfect time to buy. Right now the markets are at a record low. That
means they will soon start moving back up again. Those who have the money
to invest right now stand to be able to make great profits when the
market rises again.

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About The Author
Robert Shumake's mission is to inform the public about mortgage fraud and
real estate scams and to provide tips on how to avoid being a victim.
"Sometimes people will commit identity theft to obtain a housing loan,
sell someone else's house or take over someone else's property," says
Shumake. "It is my goal to inform the public on how to protect themselves
from being victims of this crime."

http://reitbuyer.com