REITs for Dummies

Every think your investment can have the best of say a modern day cricket match with the best allowable global stars being a part of the investment? Then it’s time to play T20 in the property market.
REIT may just be the new T20 where you merely have to be a spectator and allow the returns to unfold. So what is REIT? Well, it’s a Trust, like the kind you associate with wise people heading it and ensuring regular disbursement of cash for the institutional/individual, in this case you who is pooled in with other likeminded investors. We all know that it’d be naive not to invest in ‘property’ these days, whether the real land or in another form. It’s like gold. And remember times are achanging, so you’d be heading into the commercial space via a hand held process! It’s also a good idea to have a diversified portfolio in your investments, right? I mean, you can invest in multiple apartments (read our opinion at http://www.propertyangel.in/blog/retire-on-rent ) to get a good retirement rent. Likewise, you may have more energy but also want to try the different path – REITs. The ‘Trust’ you give your investment money to ensures yours and other investors pooled savings are jointly invested in offices, residential units, hotels, shopping centres, warehouses etc.
Why would this huge Trust (think of it as a conglomerate) even think of pooling people’s money into a non private space like this? There’s obviously money to be had. And the profitability is huge. We know you can’t afford to invest in the whole of the shopping centre for example. So REIT’s merely pick the next best option, that of creating a community of you folks so your aggregate investments help ‘pick up’ the huge commercial property. Hey, a decade of two later you don’t want to look back and regret being conservative and realising you “lost money” because you didn’t maximize. It’s boom time now.
Features of REIT:

• Accommodates smaller investors towards huge returns
• Approved by SEBI (Securities and Exchange Board of India)
• REIT units will be listed with stock exchanges and traded as securities
• Dividends are generated from capital gains accruing from sale of commercial assets
• Under a professional management to ensure maximum returns
• Exempt from tax

You must of course realize that you are not going to be investing in actual property, something that’s been a lifetime’s priority for an Indian. However, it’s time to wake up and smell the coffee beans! Sentiment and old logic should not make you miss the bus.