Benefits of Real Estate Investment Trusts (REITs)

Equity Real estate trust investors are able to own commercial real estate without any inconvenience of managing it. Real estate investment trusts can purchase and manage commercial real estate through their experienced management team. So, in management there is no as such hassle.When you buy shares in Real Estate Investment Trusts, you become a partial owner of the commercial properties. According to this, you are now partial owner of an operating business that manages the properties for the purpose of profit. Real estate investment trusts traded on major stock exchanges. They are modeled after mutual funds. Some of the real estate investment trusts are handled privately.


Real estate investment trusts(REITs) deals with wide range of properties which include shopping malls, hotels, schools or college campuses, factories, houses etc. they do not deal with limited properties. REITs hire the best management team to manage and handle everything. The team work on managing properties and the other core propose is to maximize rental income and profit. At the corporate level the Equity Real Estate Investment Trusts are not taxed at all.

Property Management Without Any Chaos.
In Real Estate Investment Trusts (REITs) you are allowed to own commercial real estate as an average investor. If you are having experienced property managers you are able to enjoy the benefits. They work for you to make your profit without any chaos or headache. For this purpose, you have to be careful while selecting your managing team and property managers. They have to deal with rent collection, tenant management, collecting dividend, facilities, maintenance and marketing.

Returns on Dividends
It is the decision of management what to do with the amount of dividend. With the equity stock the management takes decision about the dividend whether it should be paid to investors or reinvest the dividend amount. How much dividend profit should be paid to investors and how much the amount of the profit should be reinvested. In case of Real Estate Investor Trust 90% of the profit disburse to the investors. Here the investors themselves decides what to do with the amount of dividend. As in this case the decision is in totally their hand so, they decide whether the dividend amount should reinvest or not. Or how much of the amount should be reinvested. If you want to go on vacation with the dividend you can go. The all decisions are yours here in REITs.If they want to reinvest they purchase more shares. Dividends are usually stable. In case of real estate investment trusts dividend increases with the increase of rents. You are able to realize the appreciation here with the increased value of property in the trust.

Return Through Appreciation
Real estate investment trusts are stable for long term normally so they performed well. They enjoy appreciation of commercial real estate. The risks like short term fluctuation in inflation and interest rates do no impact on commercial real estate and Real Estate Investment Trusts.

Low Volatility.
Equity stocks shares enjoy higher volatility while in case of Real Estate Investment Trusts shares you enjoy low volatility in prices. The reason behind this is the two important factors are predictable, that are rental income and management expenses over the short term and long term. In equity stocks there in low prediction about profit. Whilst in the case of real estate investment trust the rental income is predictable. The experienced team and analyst can predict the performance easily. They can do accurate predictions for real estate investment trusts. This prediction reduces the siren of share price volatility.

Low Correlation.
Real estate investment trust (REITs) have also the factor of low correlation to the performance as compare to equity stocks shares performance. Their share prices performance is low in correlation so, they do not act like equity stocks, bonds and other asset classes.REITs are very useful for portfolio diversification. So, when stock prices are down REITs perform better.

 

 

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