As an individual investor, you need to give investing in a real estate portfolio a serious thought. For this, you need to connect with publicly traded companies called Real Estate Investment Trusts. With the help of these companies, the investor can acquire shares in a real estate portfolio, which generates income from different properties. Wondering how to invest in real estate?
Instead of Investing in Real Estate, more and more people are giving preference to investing in these stocks.
Invest in Real Estate Stocks (REIT’s): Benefits
1. Assured Dividends
The main reason investors prefer REIT’s is that by law REIT’s have to distribute a minimum of 90% of the income that they generate. They cannot go below this figure and the investor can rest assured of getting dividends.
2. Invest in Real Estate: Small investments
It is not that one has to invest a huge amount. One can start with a small amount as well and can get good returns in the long run.
3. An easy way of real estate investment
This is a hassle-free way of investing in real estate. This investment is in the form of shares that the individual can buy and sell with ease.
4. Invest in Real Estate: Liquidity factor
At major stock exchanges, the trading of publicly listed REIT’s can be done easily. Therefore, liquidity is not an issue in the case of REIT’s.
5. Diversification of investment portfolio
An investor gets to know and invest in the real estate market. This helps in broadening his investment portfolio. They have less association with other stocks.
6. Invest in Real Estate: Complete transparency
As an investor, you are always anxious about transparency. In fact, you need to be. The good news you can rest assure because auditors, analysts, financial media, etc monitor the performance of the REIT’s. This helps the investor get the proper idea about the performance of the REIT.
7. A type of passive investment
Like mutual funds, the REITs are a type of passive investment. In the case of real estate stocks, the investor does not have to put in time and effort of managing the property. Because here the shareholder is not owning the property. The investor does not have to develop and maintain the property.
8. Better performance
It has also been found that some of the REIT’s have better performance as compared to other stocks. There have been instances where in the slow economy some REITs have outperformed other investments.
9. Can be a source of steady income
In different market conditions, these stocks give stable and substantial returns. So, this can turn out to be a steady source of income.
Should you invest in REIT’s?
REIT is found to be a much better alternative investment option. It has been found to be giving a better performance as compared to other products. In addition, any investor can do this investment. It is irrespective of the investment capacity of the investor and portfolio size.
As per the report from Savills Federation of Indian Chambers of Commerce & Industry REIT is a secure investment option. This is because almost 80% of its underlying assets have to be operational. These assets need to generate income.
REIT is found to give better returns as compared to conventional FDs, PPF’s, etc. The report also states that the only REIT of India has done well even in the times of pandemic. One can expect good returns in the next few years. Investors so far have got good returns from REIT. Therefore, if you are considering this option of investment then you must go ahead with the same.
Wrapping up
Currently, REIT is one of the best investment options. This can be one way of getting a fixed income. In addition, from the point of view of tax efficiency, this can be a good alternative investment option. There are transparency and corporate governance framework. So, one need not have any apprehensions about investing in these stocks.
Well, the interest rates are not very high in investment options like FD’s etc now. However, REIT has found to do well even in the slow economy. Therefore, this is surely a smart investment option.
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