REITs 101: Lesson 2 Why Invest In REITs

Consistent Passive Income

In most of the countries, REITs will enjoy attractive tax rebates or tax exemption if a significant amount of net profits are paid out to shareholders in the form of dividends. That makes REITs investing a no brainer passive income generator which is a perfect instrument for retirees and income seekers. On average, REITs pay about 6-8% dividend every year.

Portfolio Diversification

Investing in a REIT provides diversification as it manages a portfolio of properties which reduces the concentration risk. As compared to direct investing in property, which is concentrated on on single asset at one location, REITs investing allows you to own multiple assets at one go. For example, Capitaland Mall Trust allows investors to have access to 16 shopping malls in Singapore

Affordability

As a retail investor, you may not be able to afford a direct investment into an enormous asset such as office buildings or shopping malls. In general, property investing in Singapore would cost at least six figures of downpayment. This creates a high entry barrier for retail investors. To invest in Capitaland Mall Trust, you just need less then $300 to get started.

Liquidity

REITs are listed on the stock exchange. It is easier to buy and sell a REIT than to buy and sell properties. You can buy and sell the same REIT throughout the day. On the other hand, buying a physical property will take more than three months to complete.