Whenever property investing is discussed, the majority of people picture investing in direct residential property through the purchase of an entire house or apartment. However, this is not the only way or type of property you can invest in!
There is also office, retail and industrial properties which are often overlooked due to the large amount of capital required. However, there is a way you can invest in this type of property with as little as a few thousand dollars!
What is a Real Estate Investment Trust (REIT)?
A REIT is listed on the stock market like a share, however instead of buying a part of a company you are buying part of a property portfolio. This portfolio may be made up of office buildings, retail spaces, storage lockers, service stations or industrial warehouses.
What are the benefits of REITS?
The benefit of purchasing a REIT is you’re able to gain exposure to a wide variety of the property sector, depending on the REIT you invest in. Many REITS also pay distributions (e.g. annual, semi-annual, quarterly) which is based on net rental returns generated by the REIT and you can benefit from any future capital growth without needing to put a large deposit down. Commercial properties often have higher rental yields than residential and can be easier to access, especially with smaller amounts of money.
What are the risks involved with investing?
As with any form of investing, there are risks involved. Property prices could fall and put downward pressure on the value of the fund and therefor unit price of the REIT. Although they are more diversified, an event like COVID-19 may mean they are unable to collect the full value of the rent. The value of the fund may fluctuate based on market sentiment. Domestic factors such as Interest Rates, GDP, Inflation, Commercial and/or Residential property market prices, can also play a factor in performance.
How do I purchase a REIT?
If you are interested in purchasing a REIT, you will need to determine if it is appropriate for your situation, research the various options available and make the purchase through your stockbroker.
Let Us Help
If you are interested in discussing REIT’s or other investment opportunities, please contact Morgans Mackay today by calling (07) 4957 3033 or visiting the Morgans Mackay webpage.
Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited (Morgans) AFSL 235410 ABN 49 010 669 726 as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.
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