Real Estate Investment Trust (REIT) is also property investment too.
Property Investment takes too much effort, time and has high risks
This statement is real and will always be true yeah. We cannot simply buy a property suddenly and hope the price will go up years later. I repeat, YEARS later. So, first would be the effort to understand, to view, to evaluate or to do all the necessary due diligence. It may mean weekends spent viewing and comparing versus enjoying a cup of coffee with friends.
Since it will take YEARS for the price to move up, it will take YEARS to earn that ‘profit.’ Just need to remember also that if we bought just 2 years before Covid-19 came, for example, then we would even suffer the risks of having to pay for the mortgage but unable to rent the unit out for rental income. Say, RM2,000 mortgage per month is RM24,000 per year! Drains us financially, totally.
Now that everyone is clear that property investment takes too much effort, time and has high risks, let’s know about another way we could do property investment and this one requires much lesser effort, time and lower risks too. It’s the Real Estate investment Trust a.k.a REIT. Here’s one which announced a rosy set of results. This is not a recommendation to buy, go and read more if you like. I do not own any REIT stocks currently.
Article in themalaysianreserve.com AXIS Real Estate Investment Trust (REIT) net income for the fourth quarter ended Dec 31, 2021 (4Q21), jumped 102.9% to RM99.98 million from RM49.27 million it posted in the corresponding period the year earlier.
The property trust stated the increase in its property income compared to the preceding year’s corresponding period was mainly due to rental from newly acquired properties, the commencement of new tenancy at Axis Industrial Facility @ Rawang and the positive rental reversion recorded for the period.
It has proposed to distribute 99% of its realised income available for distribution, generated from operations for the period from Dec 16, 2021, to Dec 31, 2021, as of FY21 final income distribution. Please do read here for more details Article in themalaysianreserve.com
Some other advantages of REITs?
#1 – Super affordable to start. We do not need 10% downpayment to buy. We just need to buy as much as we could afford.
#2 – Liquidity. We can buy today, sell today. We can buy today, sell 3 months later. Really up to us. Unlike buying a property which will take many months to complete the buy and another few months to sell.
#3 – Steady dividends. REITs usually declare as much dividend payout as they could unless they need the money for further acquisitions. So, every year, the investment will give returns.
#4 – You ‘OWN’ a commercial property you love to visit. How many of us could say we are owner of a famous and popular mall? Well, we could if we buy the REIT which manages the mall.
#5 – Professional management. I do think the professionals who are managing these REITs are experienced people. Usually with years and years of real estate industry experience too. So, their decision will be better than ours too.
Happy thinking and deciding.
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