Real Estate Investment Company
Same as term real estate investment trust (REIT): Type of investment company that invests money in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive income from the rents received from the properties and receive capital gains as properties are sold at a profit. REITs have been formed by a number of large financial institutions such as banks and insurance companies. The stocks of many of them are traded on security exchanges, thereby providing investors with a marketable interest in real estate investment portfolio. By law, REITs have to distribute 95 percent of their income to shareholders, and in turn they are exempt from corporate taxes on income or gains. In exchange for this special tax treatment, REITs are subject to numerous qualifications and limitations including:
- Qualified asset and income tests. REITs are required to have at least 75% of their value represented by qualified real estate assets and to earn at least 75% of their income from real estate investments.
- Shareholder qualifications. Generally, REITs are not permitted to be closely held and must have a minimum of 100 shareholders.
Popular Real Estate Terms
(1) The interest rate used to convert future receipts or payments in connection with real estate property to their present value. The cost of capital is used as the discount rate under the ...
Rules regarding day-to-day use of the premises. ...
A building having one house hold on the first floor and a second household on the second floor. ...
Expected selling price of property less costs to sell. It is the net amount received upon the sale of property. gross receivables less allowance for doubtful accounts, representing the ...
Also called purchase money mortgage. A seller's claim to property held by a buyer as collateral for a debt or charge. ...
Sponsor sells interest to real estate investors in one property only. The total amount received from the equity investors is used by the sponsor to buy the property for the partnership. ...
Factor used in present value computations to determine the current value of future cash flows. It is used to get the current value of what the selling price would be when the property is ...
Interest rate on a mortgage is changed periodically based on the change in a general price index to take into account inflation, such as a yearly adjustment. An example is the consumer ...
The term abutting comes from the verb “to abut” and the definition of abutting denotes more proximity than “adjacent”. Abutting is often used in real estate to ...
Have a question or comment?
We're here to help.