Most real estate investment trusts (REITs) are fairly simple to understand, but that's not the case for Annaly Capital (NYSE: NLY). If you are looking at this REIT's oversized 14% dividend yield and thinking you've found a great investment opportunity, you'll want to make sure you know these three things before hitting the buy button.

A property-owning REIT buys a building and then leases it out to a tenant. That's basically the same thing you might do if you owned a rental property, and it is fairly easy to understand. Annaly is what is known as a mortgage REIT. It buys pools of mortgages that have been brought together into bond-like securities, often called something along the lines of collateralized mortgage obligations (CMOs). Owning a single mortgage is simple -- owning a pool of mortgages that trade as a single entity is not.

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Source Fool.com