{"id":510,"date":"2024-04-26T17:02:39","date_gmt":"2024-04-26T17:02:39","guid":{"rendered":"https:\/\/demo.netlynxinc.com\/adnaikwealth\/?p=510"},"modified":"2024-04-27T14:52:12","modified_gmt":"2024-04-27T14:52:12","slug":"12-things-to-know-about-reits-before-investing-2","status":"publish","type":"post","link":"https:\/\/www.naikwealth.in\/blog\/12-things-to-know-about-reits-before-investing-2\/","title":{"rendered":"12 Things To Know About REITs Before Investing"},"content":{"rendered":"\n

REITs (Real Estate Investment Trusts) were launched in India five years ago. They allow investors to hold commercial property at a fraction of the cost.<\/p>\n\n\n\n

Why does it matter?<\/strong><\/h2>\n\n\n\n
    \n
  1.  REITs lowered the entry barrier for retail investors to invest in commercial properties.<\/li>\n\n\n\n
  2. It promised rental yields in the form of dividends.<\/li>\n\n\n\n
  3. Capital appreciation is also possible. If the value of underlying assets (properties) increases, the price increases.<\/li>\n\n\n\n
  4. REITs must mandatorily invest 80% of investors’ money in completed, income-generating commercial projects, thus addressing the issue of cash crunch and project delays.<\/li>\n\n\n\n
  5. REITs must distribute 90% of their post-tax earnings as dividends to shareholders.<\/li>\n<\/ol>\n\n\n\n

    A word of caution<\/strong><\/h2>\n\n\n\n
      \n
    1.  Like mutual funds, REITs collect money from investors to buy income-producing assets. But, unlike mutual funds, the properties brought by REITs are not easily tradeable.<\/li>\n\n\n\n
    2. The total market value of REITs is currently close to Rs 80,000 crore. However, they are not bought and sold frequently, which may lead to a liquidity issue.<\/li>\n\n\n\n
    3. The taxation is currently complex, too.<\/li>\n\n\n\n
    4. REITs decide when to distribute the dividends. Which means the dividends may be irregular.<\/li>\n<\/ol>\n\n\n\n

      What next?<\/h2>\n\n\n\n
        \n
      1. If you need regular income, consider allocating a small portion (around 8-10%) of your portfolio to REITs.<\/li>\n\n\n\n
      2. Please do proper due diligence before investing \u2013 occupancy rate, tenant diversification, lease period, etc.<\/li>\n<\/ol>\n\n\n\n

        Since REITs are too young, volatile, and challenging to buy and sell, please look at other investment areas to achieve your long-term objectives\/milestones.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Discover 12 key insights into REITs (Real Estate Investment Trusts) before investing. Learn about their benefits, risks, and taxation implications in this comprehensive guide.<\/p>\n","protected":false},"author":4,"featured_media":511,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":""},"categories":[1,3],"tags":[],"class_list":["post-510","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-most-recent","category-personal-finance"],"yoast_head":"\n12 Things To Know About REITs Before Investing - AD Naik Wealth<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.naikwealth.in\/blog\/12-things-to-know-about-reits-before-investing-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"12 Things To Know About REITs Before Investing - AD Naik Wealth\" \/>\n<meta property=\"og:description\" content=\"Discover 12 key insights into REITs (Real Estate Investment Trusts) before investing. 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