Real Estate Investment Trust (REIT) and its Advantages.

By Abhay Harish Shah , Realty Quarter

The basic term for any investment need was LIC, Mutual Fund, Gold and Real-estate. Gone are the days when a large number of people were investing in real-estate. Due to a static market, people don’t tend to invest in real-estate as much, as it used to be previously.

Real Estate Investment Trust (REIT) can be said a company who owns or finance income-producing Real-estate in a variety of property sector. There are many requirements to become a qualified REIT company. Most REIT companies trade on stock exchanges and, they provide many benefits to their investors.

Real Estate Investment Trust (REIT), helps an investor to invest in real estate which is been already approved by the Security and Exchange Board of India (SEBI). REIT is been developed by considering all types of investor, that means a small amount of investment is also allowed to be done by an individual.

Previously a minimum investment amount required was Rs.2lakhs , but now it is reduced up to Rs.50,000.

It is the ultimate chance to invest in real estate and earn a dividend-based return.

Experts say “Investing in REIT is a profitable step as the company has to pay 90% of their taxable income to their shareholders (annually) in the form of Dividend”.

People who are likely to invest in Real Estate Investment Trust (REIT) should know that the actual return on investment will be calculated after taking all the taxes into account. Other factors like Individual income tax slabs, holding period, and other sources of income will also be noted down.

REIT is considered as an investment plan for an individual who is looking for diversification and liquidity for their fund. As this is not correlated with any other assets terms, REIT is been said to be the best investment scheme with low risk and high return.

Advantages of REIT.

Low risk: As said earlier REIT is not correlated with any other asset terms it is known as the lowest risk investment plan for all people. Investors can enjoy their dividend without any hassle as all the main things like marketing, rent collection, tenant management is done by the management team only.

Dividend: REITs are supposed to pay 90% or more of the profits to their investor. Compared with other equity products where a company choose to pay the dividend or to reinvest in the same company, REIT allows the investor to decide whether to reinvest the profit given or to take away the profits. If an individual chooses to reinvest then, they can easily do by just by purchasing more shares.

Low volatility: REIT is not considered to be attached to any other type of assets so, the volatility of it is very low which means the overall exposure to risk is less and safe. Also, an investor will have an idea of their income as the amount of return will be predicted at earliest.