What are Real Estate Investment Trusts or REITs?

Swatantra Kumar explains: REITs or Real Estate Investment Trusts are a special type of investment vehicle which operate more like mutual funds but invest in real estate properties for returns. These properties are usually income generating properties, commercial or residential, and the returns from such investments are passed on to the investors in the REITs.
Usually REITs’ units, issued by fund houses, are traded on the bourses and investors can buy and sell those units like stocks. In India, market regulator is in the process of formulating rules for launching REITs in India.
In several of the developed markets, REITs are one of the most liquid investment products for investing in the real estate sector even with a relatively low sum of money than the investor would have if he/she had to invest directly in real estate. The various types of REITs include equity, mortgage and hybrid ones.