Anyone interested in commercial real estate investments will have heard of a Real Estate Investment Trust (REIT). Many real estate investors choose REITs as a safer option to invest money and expand their portfolio.
For many investors, REITs take away the headaches of having to manage properties and collect rent from their tenants.
Is investing in a REIT for you? Here are 5 reasons why a real estate investment trust may just be the answer to your investment worries in an unstable market.
1. Safer than stocks
When you buy a REIT unit, you get a proportion of the profits and losses of the investment. Although, as with any investment, there is a measure of risk associated with it, it is safer and more predictable than investing in stocks. If you choose carefully, you will also find that a REIT is a lot less work than investing in individual real estate properties.
2. Less risk investing in REITs
There is also a lot less risk of investing in a REIT. Investing in properties to lease or rent is a massive investment and it may take some time, even years to see a return on your investment. It is also difficult to predict how the real estate market will be fairing in years to come. REITs give you the opportunity to invest in property portfolios debt free.
3. Income Tax Benefits
One reason why many real estate investors are choosing to add REITs as part of their investment is for the income tax benefits they receive. In Canada, part of the distribution of REITs is viewed as a return of capital, and this is not taxed. This can increase the value of your investment and leads to bigger gains and stronger growth.
4. Healthy Investment Market
Over the past few years, there has been a steady increase in the payouts REITs are providing to investors. In the 5 years previous to 2015, average yearly distributions in Canadian REITs have increased by over 6% per year.
5. Sit Back and Enjoy the Profits
Every REIT is managed by a professional team which has in-depth knowledge and experience in the real estate market. This can make investing in a REIT accessible for everyone. However, if you already have your own portfolio of properties, a REIT can give you the opportunity to expand your investment without the extra work of taking on more properties.
Canadian REITs offer investors a solid investment in the real estate market. Choose the best REIT for your investment can let you experience great yields on your investment without the risk and hassle of managing a portfolio of individual properties.
