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REITs may offer diverse investment opportunities

In 1960, Congress passed legislation that created a form of specialty investment vehicle known as the real estate investment trust. REITs allow people to purchase interests in different classes of commercial property, like retail centers, apartments, industrial spaces and health care facilities. By eliminating the need to manage such properties on a day-to-day basis and lowering the cost of entry, REITs might provide passive income for Maryland investors who lack the resources to make outright purchases.

According to real estate analysts, investors use REITs to fulfill numerous objectives, such as portfolio diversification or long-term return generation. While the majority of these trusts concentrate on equity, about 10 percent are devoted to the debt side, purchasing mortgages or mortgage-backed securities. Regardless of their specific nature, all REITs must distribute their income in the form of dividends, and investors can purchase shares in stock markets.

Investment professionals say that although the U.S. stock market is coming to the close of a bull run, domestic and international REITs still offer growth potential and ready liquidity. Investors can choose their own trusts like they would with any other portfolio asset or property type.

REITs provide alternatives to standard commercial real estate investments, but they are not free from risk. Investors who want to improve their portfolios may find these vehicles function best when they are paired with traditional commercial property assets or used to balance the risk associated with other holdings. A prospective investor may want the assistance of a real estate attorney when examining the different commercial properties of a particular REIT to see whether any problem areas can be identified.

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