Texas Real Estate Principles 2 Practice Test 2026 - Free Real Estate Practice Questions and Study Guide

A Real Estate Investment Trust (REIT) is defined as a company that owns or finances income-producing real estate. This structure allows individual investors to earn a share of the income produced through commercial real estate ownership without having to buy, manage, or finance any properties themselves. By pooling more capital together, REITs enable small and large investors alike to invest in larger portfolios of real estate properties, such as shopping malls, apartment complexes, and office buildings, which in turn may yield dividends from the income generated.

The other options do not correctly represent the nature of REITs. Consultancies focus on providing advisory services rather than owning or managing real estate directly. Loans pertain to financing aspects rather than the ownership and management of properties. A sales agreement relates specifically to the transaction of transferring property ownership, which is distinct from the purpose and function of a REIT. Thus, C accurately captures the essence of what a REIT represents in the real estate investment landscape.