Being able to own a house you can call yours is a dream for many. However, it’s not easy to make this happen. It takes years of research, time, and effort. Along with this, the investment that’s required is hefty as well. Not everyone is able to afford real estate in this day and era.
The real estate market is currently picking up back again since Malaysia is close to an endemic. Owning a property can also have various other benefits apart from seeking refugee, comfort and shelter. It can produce income. People make investments in these to earn recurring money. Vacant land is a loss of revenue and this is why it should either be built into a house or the property should be sold at a better price.
| What Is REIT?
What Advantage Does A Real Estate Investment Trust Provide? |
Selling a property is a tricky business as well. But thankfully, there are real estate agents willing to help find either the right buyers. When it comes to giving a constructed house away for rent, an estate agent can assist you in finding the right tenants. Real estate services can be slightly expensive but they are mostly worth it.
Despite the advantages of having a property, it’s still very difficult to invest in one. This is where Real Estate Investment Trust Fund comes in. These are a type of security deposit that invests in real estate and are listed publicly on stock exchanges.
What is REITS?
In simple words, REITS provides people the opportunity to invest in real estate by paying a smaller sum initially for large-scale commercial real estate. You can perform this even without having to buy the property directly. This package offers you a rather stable income and distribution yields as well.
There are many benefits and advantages that one can enjoy after investing in listed REITs. One of the best ones is the state of liquidity of REITs. Units which is listed as REITs can be exchanged for cash very easily since they are mainly traded on stock exchanges. This is a lot better than getting a mortgage.
Being able to maintain a stable income is another great factor. These investment payouts are very similar to dividends. These can be gained by the rent which comes from the units given out to other tenants. These estates become a personal property which is an asset along with receiving recurring money.
Most of the properties listed under REITs are managed by professionals who understand the real estate industry and real estate land really well. Whether it’s residential real estate or commercial, they tend to manage it properly with the experience they have. These real estate agents also end up adding value for a higher yield.
While the benefits explained above are fruitful, the biggest advantage is still the affordability. The list of areas sectors in which you can invest through the REIT initiative is retail shopping centers, residential buildings and condominiums, commercial office buildings, hotels and accommodations, townhouses, healthcare facilities, hospitals, and many others.
The real estate industry is very diverse which is why REITS becomes a great chance to enjoy multiple benefits while owning an asset. The economic growth of a country is also highly dependent on this industry. Let’s analyze further to understand if REIT is a good investment and who should opt for this.
Is REIT a Good Investment?
There are different narratives professionals have regarding investing REITS. A deeper understanding of the pros and cons will help you understand very clearly if it can be a good investment.
The main reason why people opt for REITS is the advantage of pooling money with like-minded people and owning something higher in value and ROI. The passive income can be higher depending on the kind of investment that has been made. If you’re looking for an income that doesn’t fluctuate often, REITs can be a good investment indeed.
Buying a raw or undeveloped property might not be a good idea if you’re only investing to earn more on the side. But this does have further benefits. Improving the property by hiring construction workers and building more can offer higher returns as time goes by. One can also go for a simpler method of investment and buy single-family homes, individual units, or other different types of properties.
It’s important to understand that not all REITs are equal or hold similar values. This is something that can decide if it’s truly a good investment or not. Investing in a commercial property that is linked to retail is said to be the safest investment by most professionals. They are highly recommended for beginners.
If you’re someone who is looking for a high yield rate, a real estate agent will recommend an industrial property for you to invest in. The major reason behind the high yield is the short land lease of industrial land spaces dedicated to factories and warehouses.
The hospitality REITs are also options of investment worth considering since Malaysia gets a lot of traction from tourists. Hotels and serviced residences do very well when it comes to making enough for rental. Their lease positions are stable as well. As a form of investment and building income, hospitality is a good REIT as well.
Many might not be aware of this but for a few years, investors haven’t been satisfied by the investment made incorporating properties or buildings. The main reason behind this is the influx of office spaces which has led to low rental opportunities. One should consider thoroughly before investing in this category of REIT.
The main categories of REITs have been analyzed in-depth to assist you in understanding if it’s a good investment. In a nutshell, the kind of real estate your ownership is in will decide that. Investment is a crucial decision made by an adult which is why making the right call is necessary.
What Advantage Does a Real Estate Investment Trust Provide?
When opting for a Real Estate Investment Trust, one should understand the advantages in detail. These pros can help you understand the benefits you can gain from this investment. Key advantages include tax incentives, low initial investment, hassle-free management, and others.
A tax-eligible property can sometimes become a liability if the percentage being given out is a bit too high. When an owner of the property decided to sell or lease a raw land, individual unit, department apartment, or even raw land, they are subjected to either income tax or real property gains tax.
The tax percentage differs depending on the kind of property but it’s payable indeed. On the other hand, REITs are completely exempted from various taxes on ownership such as corporate tax, real property gains tax, or even stamp duty. This is a wonderful advantage to enjoy. This leads to higher yields and incomes for most investors.
Deciding to own property can be expensive to the point that just paying the down payment one shot can be damaging. But when it comes to REITs, most retail investors get the chance to enter the real estate market easily. Since economic growth is directly proportional to real estate in one way or another, REITs can provide many benefits.
Investing and ownership of a property is one problem but other enters only later and many do not see it coming. Managing and maintaining a property and managing tenants is not as easy as it might sound. In a situation where your property is listed in REITs, a manager will be in charge of taking care of this.
What are Real Estate Investment Trust Funds REITS?
After analyzing the factors which decide if REIT is a good investment and knowing the advantages in detail, it’s important to also ask a question such as what are real estate investment funds actually?
In easy words, REITs are a rather safe way to invest in real estate. The concept came from the United States and was first introduced there. Malaysia adopted this later on and AXIS REIT came into being. The foundation of this concept is very similar to a mutual fund, people with adequate funds come in together and invest in something expensive which can be afforded by a single party alone.
They give small investors a chance to acquire and have ownership while improving the economic growth of the industry as well. There are various advantages of this initiative. Being able to earn passive income is one of these pros along with tax incentives and hassle-free management.
Is REIT a Low-Risk Investment?
REITs are not commonly known as an opportunity by many in Malaysia. This means that being able to compare the risk of knowing if it’s a good investment is something many are unaware of. REITs are a low-risk investment since people will less knowledge in investment can opt for it as well.
Beginners who do not understand real estate are mostly reluctant to invest due to the risk but REITs are ideal for them. The reason why the risk is so low is that they are supported and promoted by the government. The passive income which can be earned is high and so are the yields which can be gained from this ownership.
Most taxes are also exempted for these properties since they nurture economic growth. Liquidity is also another reason why they are a low-risk investment. Unlike physical property where your money is locked down, REITs can be bought and sold like shares in a simple procedure. This makes it a high liquidity investment which saves time and money both when in need.
The management of these properties is done by professional estate agents who understand how the real estate industry works. When an expert’s advice and management are involved, one can develop better trust and the chance of risks eventually become less as well. In Malaysia, a few low-risk REITs include Axis, IGB and Sunway, and a few others.
When it comes to avoiding risk in any investment, one should always depend on thorough research and advice from experts who understand the real estate industry very well. Risks can be a part of investments but it’s necessary to take calculated risks especially if you’re a beginner.
Conclusion
When it comes to avoiding risk in any investment, one should always depend on thorough research and advice from experts who understand the real estate industry very well. Risks can be a part of investments but it’s necessary to take calculated risks especially if you’re a beginner.
If you’re looking for further advice and considering making an important property investment decision, IQI Global Agency offers a wide variety of options and their exceptionally talented team would be able to give you the right advice as well.
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