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What is a Hybrid REIT?

A Hybrid REIT blends the two major classes of REITs (Equity REITs and Mortgage REITs) to give the investor increased diversification with one investment.

A Hybrid REIT is a marketable security much like a mutual fund, invested in both Equity and Mortgage real estate investments. The equity part includes income-producing properties, in which the REIT company owns equity in the property.

The mortgage portion consists of mortgages or mortgage-backed securities, in which the REIT earns revenue from debt interest payments. REITs must distribute 90% of their revenue each year to their shareholders (in the form of dividends), and this makes them a high-yield income investment.

The tax burden is also distributed to the shareholders year to year, however, much like mutual funds. Shareholders can reinvest the distributions to take advantage of compound interest.

REITs give investors the opportunity to participate in real estate investments without the liquidity risks buy-in present in many other types of real estate investing.

What is Mortgage REIT?
What is an Equity REIT?

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