Real Estate Investment Trusts

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Real Estate has evolved as the most profitable business over the years for those who can invest heavily in land or property and wait for their increase in value. However, the property may fetch instant cash in exceptional times like the sudden increase in value due to market reasons such as experienced just before the global financial credit crunch or due to the property’s unique location. This is classified under the short term type of real estate investment. The classification is based on the relative time spent to consolidate worth. The long term type of real estate investment therefore means that the owner has to wait for longer for the property or land to consolidate worth. (Isaac, 1998).

The short term type of investments need professional skill, current knowledge and experience in the market.

Long term estate investment is generally considered to be the most profitable since the period of the investment is longer and the returns are good. A different classification identifies Real Estate Investment Trusts, land investments, rental properties and vacation rental properties as the different types of Real Estate investments. This is a more narrow and specific classification than the previous one. The history of indirect investment in property can be traced back to the 1950s across the world.

A diverse range of property investment vehicles have emerged since then. These vehicles are classified in into debt and equity.

Direct investment has a number of features that form a basis of its attractiveness especially as a means of portfolio diversification. However it has certain adverse features which include heterogeneity of property leading to uncertainty of its value, lumpy property which means that only large financial in...

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