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Real Estate Investment Trust printing Not everyone has the financial ability to own and rent out multiplehouses for extra income. And even fewer people want to deal withlate night calls from tenants crying about their broken oil burner.Well, thanks to real estate investment trusts, or REITs, you don'thave to deal with the stresses of being a landlord to make moneyoff of the real estate market.

A REIT is any entity that pools money from a group of investors tobuy different kinds of real estate or real-estate-related assets,such as buildings or mortgages on buildings. It uses the incomefrom rent and loan interest to pay out a steady monthly dividend toits investors.

There are three types of REITs. The most common one is an equityREIT, which simply buys buildings and generates revenue from therent it charges. Mortgage REITs loan out money to owners of realestate for mortgages or buy existing mortgages to collect interest,which is then paid out to the REIT's investors. Finally, there arehybrid REITs, which are a combination of mortgage and equity REITs.

REITs can be public or private. Public REITs are bought and soldjust like stocks and are listed on exchanges, while private REITscan only be bought through direct-participation programs. Withprivate REITs, the investors are actually part owners of the realestate rather than just shareholders of the REIT corporation. Theycan't sell shares and they typically have to keep their money tiedup for eight to 12 years. However, there's the benefit of lessvolatility since the market can influence public REITs.

One potential drawback to REITs is how they are taxed. Whilequalifying equity dividends are normally subject to only a maximumof 15%, the dividends from REITs are taxed as regular income, whichcould be much higher -- depending on how much money you make.