A Real Estate Investment Trust, known by its acronym REITin English, is an investment company that works with a structure similar to a company and reports income that comes mainly from rentals of real estate properties.
Buying shares of a REIT is easy and by owning shares of a REIT, you are investing in an instrument that generally pays dividends, so you will be generating passive income from the ease of your mobile phone.
This instrument works like an action, but it differs in several aspects. In this sense, it is important to note that the price of REITs does not tend to vary too much in general, so buying them is a defensive and long-term investment.
REITs, likewise, typically pays higher dividends than other publicly traded stocks, so keeping them in your portfolio might be the best way to take advantage of them.If you’d like to read more about REITs in Singapore, you can check out https://www.realvantage.co/insights/an-overview-of-investing-in-reits/ to gain a better understanding.
REITS offer a direct entry into the world of real estate investments, but without the need for the intermediaries involved in this kind of investment. Now, thanks to your REITs account, you can have immediate access to a wide range of stocks and REITS, and you can take advantage of the acquisition of ETFs to start investing in real estate.
Types of REITs
When buying a REIT, in the same vein as stocks, it is important that you consider the fundamental aspects that mark the performance of the instrument you are buying. Also, it is important that you know the different classes of REITs that exist in the market. There can be three types:
- Heritage REITs
These REITS invest in properties and distribute income thanks to the collection of rents. A heritage REIT can have properties of all kinds under its name, such as apartments, offices, hospitals, warehouses and more.
In this sense, it is common for there to be equity REITS that focus only on one class of property, although there are also REITS that diversify their investments.
- Mortgage REITs
These REITS work like the previous ones, however, they differ in that Mortgage REITS pay income to the shareholders thanks to the interest generated by the mortgage payment. This class of instrument tends to have a little more risk compared to equity instruments, mainly due to the possibility of default on mortgages.
Mixed REITs
They are in charge of doing the two processes described above, but they do it simultaneously, so their dividends are paid thanks to the payment of both mortgages and rents.
Advantages of REITs
REITS allow you to have access to passive income during the year, as their constitution is built on the principle of dividend distribution and, generally, they distribute 90% of their income in the form of dividends to their shareholders.
If you are interested in knowing how much you can receive for buying a share that pays dividends, you should look at its Dividend Yield, which is established in percentage points in relation to the price of the share and is paid on specific dates throughout the year (usually every three months)
