"Manage risk" is the first rule every real estate investor follows, and Real Estate Investment Trusts (REIT) are no different. The economy could go sour; how will you mitigate this risk? A change in government may result in drastic change in investment regulations (Canada saw this a few years ago); how will you this challenge? Zoning laws change, as well as market demands. It's a wide world of risk out there, and investors are often left searching for answers. REITs, though, offer a robust toolkit that wise investors can use to not only reduce risk, but also increase reward.

The secret weapon for real estate investment trust holders is the management team. They should understand the real estate market (so the investor doesn't need to). The management team must also be consummate property investors and property managers. If you choose your management team wisely, they will be on the lookout for declining property values or underperforming units within the portfolio, and will behave accordingly, either divesting the portfolio of these properties or working hard to increase their value.

While property development is often considered to be full of risks for individual speculators, REIT actually make this exercise rather simple for the investor. This is because the management team always has a strong competency in property development, and, what's more individual REIT unitholders are never alone - they share the risk with other unitholders in the trust. Combining safety in numbers with the professional expertise of property developers is another surefire way to minimize risk and maximize return.

Taxes are another risk associated with property investment that can be mitigated by a competent and talented management team. Tax regimes often experience variations, caused by changes in government or economic conditions. A management team reduces this risk by conducting good situational awareness practices - the team should be aware of new taxes appearing on the horizon, and then adjusting the portfolio accordingly.