What do investors buy in a Real Estate Investment Trust?

Investors buy shares in a Real Estate Investment Trust (REIT). A REIT is a company that owns, operates, or finances income-producing real estate across a range of property sectors. By purchasing shares, investors can gain exposure to real estate markets without needing to directly own or manage properties themselves. This structure allows investors to pool their capital for bulk investment opportunities, similar to how they would invest in stocks.

Shares of a REIT represent ownership in the trust and entitle the investor to a portion of the income generated from the properties owned by the REIT, typically in the form of dividends. This is appealing to many investors because it offers a way to invest in real estate with a relatively low barrier to entry, providing both income and potential for appreciation.

While bonds, options, or direct real estate ownership are viable investment options for different types of portfolios, they do not accurately describe what investors purchase when they engage in a REIT. Bonds represent debt securities, options are financial derivatives, and while direct real estate ownership involves purchasing physical properties, it is an entirely different investment strategy compared to buying shares of a REIT.