What is the primary function of a real estate investment trust (REIT)?

The primary function of a real estate investment trust (REIT) is to enable investors to earn income without directly owning physical properties. REITs are companies that primarily invest in income-producing real estate and offer shares to the public. By purchasing shares in a REIT, investors can benefit from the income generated by real estate investments, such as rental income from properties or profits from property sales, without the responsibilities and risks associated with direct property ownership.

REITs typically pool the capital of numerous investors to buy and manage a diversified portfolio of real estate, making it easier for individual investors to participate in the real estate market. This structure allows for liquidity, as shares of publicly traded REITs can be bought and sold like stocks, providing an accessible way for investors to gain exposure to real estate while receiving regular income distributions.

In contrast, managing residential rental properties focuses specifically on a segment of the real estate market and does not encompass the broad investment strategies that REITs offer. Providing loans for real estate development is usually associated with financial institutions rather than REITs, emphasizing the capital financing side of real estate rather than investment. Selling commercial real estate listings pertains to the brokerage aspect of real estate rather than investment, which is not the primary focus of a