How are leveraged purchases of REITs generally made?

Leveraged purchases of Real Estate Investment Trusts (REITs) are typically made through a brokerage margin account. A margin account allows investors to borrow funds from the brokerage to purchase more securities than they could with just their own capital. This leverage can amplify returns but also increases the risk, as losses can also be magnified.

Using a brokerage margin account means that investors can take advantage of price movements in REITs without needing to tie up all their own money. When utilizing margin, the brokerage lends the investor money, secured against their existing investments, allowing the investor to leverage their buying power.

In contrast, other options do not facilitate the borrowing necessary for leveraged investment in securities. Personal loans from family are generally not structured for investment purchases on a broader scale, savings accounts do not provide leverage for trading, and cash-only purchases limit the potential for investing beyond one’s own capital. Thus, brokerage margin accounts are the most straightforward and common method for investors looking to leverage their investment in REITs.