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Expand Y our Proper ty Por tfolio

REITs provide a way for you to invest in property without taking on any of
the managerial responsibilities (or enjoying any of the entrepreneurial oppor-
tunities) that direct ownership entails.

Where Can You Buy REIT Shares?

Many REITs trade publicly on the New York Stock Exchange. You can also
buy mutual funds that own shares in a dozen REITs or more. As another
possibility, you can invest in private REITs. Typically, shares in private REITs
are sold by financial planners and many Wall Street stock brokerage fi rms.

( Caution : Unlike the publicly traded REIT shares that you can buy/sell on the
major stock exchanges, private REITs may not offer good liquidity. You may
not be able to easily sell your shares.)

Benefits of REIT s
Most people can’t afford to buy a Manhattan office building, a 600-unit Dallas

apartment complex, or a Miami regional mall. So REITs give you the opportu-
nity to become part-owner of these and similar multimillion-dollar properties.
In addition, public REITs offer the same liquidity as other publicly traded
stocks. REITs also provide their shareholders relatively high dividend yields
compared to the yields of the S&P 500 or the Dow Jones average. Over time,
as their owned properties increase in price (inflation and appreciation), REIT

share prices also tend to increase. When in compliance with various require-
ments set by the Internal Revenue Service, REITs pay no income taxes on
their net incomes.

Risks of Real Estate Investment Trusts

When trading as stocks, share prices can jump up and down according to the
whims of the stock market and investor sentiments. REIT share prices exhibit
far more volatility than the values of their underlying properties. Their share
prices and dividends can fall if management fails to acquire and operate the

properties profitably. Overall, though, for the past 30 or 40 years, REITs
have delivered their shareholders quite favorable, risk-adjusted, total rates of
return.

Homebuilders and Mortgage Companies

In addition to REITs, you can profit with real estate related investments when

you own shares in homebuilders such as the publicly traded builders K&B,
Toll Brothers, WCI, and D.R. Horton. You might also buy shares in fi nancial

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