Make Money by Investing in REITs

REITs have been a discussion of investment area since the first REIT investment took place last month. The Embassy- Blackstone REIT oversubscription has made everyone curious regarding how it is going to turn out. The commercial real estate has been garnered significant focus as a great investment option for the high returns.

REITs are the investment schemes that generate funds by pooling money and then distributing the dividends among the shareholders. The dividends are generated by putting the property on rent and profitable sale of the real estate property.

Investors can get two kinds of returns from investing in REIT- one through the sale of REIT unit and the capital gain made from it. Another way is through dividends. REIT is a good option for investors who want to invest in real estate and want to make steady returns without any risk involved.

Before intestine in REIT

Like every other investment area, it is essential that the investor looks into the pros and cons of investing in the REITs as well. According to the reports, the REITs across the globe have given five-year returns in the range of 7 to 16 percent. The Asian market, on the other hand, offers a return of 8 to 10 percent as the economies of the Asian countries are on the rising.
Even though the oversubscription of the Embassy- Blackstone REIT is encouraging, investors must check the credibility of the developer and invest only when they are sure about it.

Returns on investment

On average, the cost of the property rises at an average of 14 percent every five years in India. The commercial real estate of the country has given good returns since 2017, and it is expected to grow and fetch more returns in future.

Risks involved

REITs are often seen as a less risky area of investment. In India, the REITs will be overseen and monitored by the regulatory body SEBI. The developers have to follow the guidelines laid down by the SEBI and appoint a regulator, a trustee, a manager and a valuer for every REIT. This is expected to increase transparency in the REIT sector.

REITs come with their risks and therefore need a market manager to keep in check the instabilities caused due to a fluctuating market. Though the return on rental income in REIT is generally stable, the vacancy risks can arise from the vacant spaces in the underlying property.

Liquidity

Easy entry and exit on the real estate makes it easier for the investors. Therefore, investing in REIT is easy and cheaper than investing in actual property. If the investor needs money, they can sell their share on the stock market and get the funds from it. SEBI is now working on the structured leasing, leading to regular performance evaluation of brands within the malls.

It is expected that more REITs will come up and give more opportunities to the investors.

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