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Equity REITs operate like a landlord. They handle all of the management tasks you might typically associate with owning a property.
Equity REITs own underlying real estate, provide upkeep, collect rent checks, and re-invest into the property.
Mortgage REITs
Mortgage REITs differ from equity REITs in that they do not own the underlying property. Mortgage REITs instead own debt securities backed by the property.
For instance, a family takes a mortgage out on a house. That type of REIT may purchase that mortgage from the initial lender and collect monthly payments over time. That would then generate revenue through interest income. The family, in this example (i.e., someone else) would own and operate the property.
Mortgage REITs are typically riskier than equity REITs. However, they also tend to pay out higher dividends.
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This article was originally published by a www.mpamag.com . Read the Original article here. .