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Investment Vehicle for Medical Professionals

Investment vehicle for medical professionals

REIT is an investment vehicle that as a medical professional may want to consider as you journey towards financial freedom. Therefore, it is imperative that you grasp what it entails before you invest your money through it. This article covers the basic knowledge on REIT that you need to know as an investor.

What is REIT?

A real estate investment trust (REIT) is a company that owns, operates or finances income-producing properties.

REITs have a straightforward business model: Leasing space and collecting rent on the properties, then distributing that income as dividends to shareholders.

Type of REITs

Several types of REITs do exist. The funds are classified to indicate the type of business they do. They can further be classified based on how their shares are bought and sold.

  1. Mortgage REITs

This is also known as mREITs. It lends money to real estate owners and operators. The lending may either be indirectly through the acquisition of mortgage-backed securities or directly through mortgages and loans.

Their earnings come mainly from the spread between the interest they earn on mortgage loans and the cost of funding these loans.

  1. Equity REITs

This is the most common form of enterprise. They buy, own and manage income-producing real estate. Revenues are earned primarily through rents and not from the selling of the portfolio properties.

  1. Hybrid REITs

These holds both mortgage loans and physical rental property in their portfolios. They may weigh the portfolio to more property or more mortgage holdings, depending on the stated investing focus of the entity.

  1. Publicly Traded REITs

As the name suggests, this one offer shares that are publicly traded which list on Nairobi stock exchange market. There they are bought and sold by individual investors. They are regulated by the Nairobi Securities Exchange (NSE).

  1. Public Non-traded REITs

This is also registered by the Nairobi Stock Market, but they don’t trade on NSE. As a result, their liquidity is less than that of publicly traded REITs. However, they tend to be more stable because they are not subject to fluctuations in the market

  1. Private REITs

These are not registered with the Nairobi Securities Exchange and they do not trade on Nairobi Stock Market.

Before making a decision of choosing it as a fincancial vehicle, please consult with your financial and investment advisor.

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