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What is Securitized Real Estate?

For the non-professional investor, a phrase like “securitized real estate” may not be a familiar concept. However, it pays to learn about this type of investment, as it offers a unique set of benefits not found elsewhere.

Securitized real estate is simply real estate that is packaged and sold as a security. As such, it is regulated by federal securities legislation which promotes fuller disclosure and provides more suitable investments.

Traditional real estate investments have proven popular with investors because these type of investments provide straightforward tax advantages, regular monthly income, potential equity appreciation and portfolio diversification. Yet, these benefits are often offset by concerns that with real estate comes responsibility for property maintenance and management. Add to this the fact that real estate is not highly regulated nor as transparent as securities, and it is easy to see why some investors gravitate to other, more regulated investments.

However, with the creation of securitized real estate, an investor can enjoy the benefits of real estate ownership without the hassles of day-to-day management. Investors also benefit from a more strongly regulated investment. Securitized products provide an interesting alternative for the investor who wants both security and real estate in their portfolio.