Owning your own home or an investment property isn’t the only way to gain exposure to property. A real estate investment trust (REIT) can be an effective way to dip your foot into the market.
REITs are publicly listed pooled investments. The funds are used to buy all kinds of property, from offices to apartments and hotels.
Like any publicly listed security, REITs can trade at a premium or discount to the underlying value of the assets, measured as net tangible assets (NTA). So, if the market is booming, the REIT can trade for more than what its underlying assets are worth, and vice versa.
Because they’re publicly listed and frequently traded, they provide highly liquid exposure to property – much more liquid than owning an investment property yourself.
Real estate assets pay their owners rent. This means a regular yield for investors, usually in the form of monthly or quarterly distributions.
But REITs can also provide capital growth. If the price investors are willing to pay for a REIT increases, then existing investors can realise a capital gain.
Finally, REITs offer investors an added layer of diversification. This can be both within and across asset classes. Diversification from within the asset class can be achieved by holding investments in different sectors, such as industrial and retail, while diversification across classes is achieved by holding an asset that is qualitatively different from others.
Assess the risks
REITs share many of the same risks as other listed investments. Some are susceptible to concentration risk if they’re overly invested in one sector. In Australia, concentration risk can be a problem because most of the REIT market is invested in office and retail space. In addition, the top five A-REITs account for almost 60% of the market.
Diese Geschichte stammt aus der September 2021-Ausgabe von Money Magazine Australia.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der September 2021-Ausgabe von Money Magazine Australia.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
An outrageous, beautiful monopoly
Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.
Drop the anchor to judge value
Buying and selling decisions should be based on where a stock price is going, not where it has been.
Powering the AI boom
Beyond the software and chipmakers, where will the energy come from?
Get into life
Tucked inside super are products that can protect you from life's inevitable uncertainties.
Paths to home ownership
Taking the road less travelled can sometimes deliver unexpected benefits.
Sold! Quick ways to add value
Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.
Money lessons the kids need to know
Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.
Property-investing rules: are they likely to change?
The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.
What's love got to do with it?
A rollercoaster of emotions could be driving poor crypto behaviour.
Are we ready to be cash-free?
Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.
