How Do Mortgage REITs Work?

How Do Mortgage REITs Work?. Part of the series: Personal Finance Tips. Mortgage REITs operate in a very distinct and interesting way. Learn about how mortgage REITs work with help from the manager at an independent investment advisory firm in this free video clip. Read more: www.ehow.com/video_12199676_mo...

[@grit1679]

I thought it was a great video! Sure there are pauses, but it's a complicated subject he's presenting to a beginner like me, so it gives my brain time to catch up with what was just said.

[@cvf628]

As I understand residential REITs for new construction it is a combination of equity and debt financing. A REIT can raise 25% of the cost of new construction before a shovel is in the ground. Then the developer can obtain debt financing from a lender for the entire project. So what is included in that upfront equity in the construction?
This is different from traditional debt financing in that the developer makes their profit after all the units are sold. But with equity financing they can take their profit before construction has started. This gets me worried in that the developer isn't taking a risk. They can make their profit before construction starts or they may never start construction and just keep buying land. As long as their intention is to build, it's not a Ponzi scheme, but it's close.

[@vassilis9635]

thanks a lot

[@AdamMM-hq3gv]

But if the company forcloses they can sell the house after they have collected what they could from the payments, and if there is mortgage insurance then it should be win×3 for the REIT right?

[@mw-cf5dr]

Jeeze man, good information but hard to keep my attention, perhaps try using this recording to make a structured monologue to just read.
Don't mean to be rude but the lack of continuity makes it hard to follow.

[@ProfitBoss]

I was able to take the dog for a walk and complete other tasks in between each pause so the video worked for me