You don’t need to be a millionaire to profit from rising property prices and high rents. Real Estate investment Trusts (REITs) can give you access to a diversified investment portfolio of properties without the hassle and other disadvantages of direct ownership.
With a REIT you get the following advantages compared to direct ownership:
No upfront costs like notary fees, Stamp Duty, surveyors fees, solicitors conveyancing fees etc You will own a diversified portfolio of properties. Problem tenants are not your problem. No ongoing administration to deal with, like inspections, insurance, repairs, rates, taxes, accountancy fees, and replacing tenants. Dividends can often exceed the net rent you would get from direct ownership. No need to apply for a mortgage. Vacancy periods don’t affect you. Daily liquidity on the stock-markets. No gains tax to pay when a property is sold (but you may have CGT to pay if you sell your shares). Professional Management of a portfolio of properties. The REIT can manage synergies such as the balance between residences, offices, commerces, entertainment and transport premises in a particular area. The NAV of the REIT will likely benefit from the general rise in property prices. REITs usually have the firepower to take advantage of development opportunities. Quite often the rents received by the REIT were negotiated several years ago, meaning that there is upside as tenants leave and are replaced by new ones paying the current going rate.
As a bonus in this episode you’ll hear how I was enticed by the scantily clad “Lovely Linda” into her appartment.
