One of the most significant ways to secure your future is through smart investments. Investing in real estate is a profitable venture that builds up eventually. A friend of yours suggested you give REITs a try. Simply put, REITs refer to Real Estate Investment Trusts. They are companies that own, finance, and manage real estate properties. Generally, investing in REITs is a good entry point for small investors and those who want to get their fingers on investment.
How do you get started with investing in REITs? What are the advantages? Is it worth investing in a REIT? These questions will be answered as you read this article.
REITS Defined
Many people are considering investing in REITs as they are considered a worthwhile investment option. You need to invest by purchasing property shares. With REITs, you can earn from the shares of the acquired assets. Collecting rentals, storage fees, user, tolls, and parking fees are ways for a REIT to make money.
Do you need a lot of time investing in REITs? It requires you to have minimal involvement.
REIT is like having stocks. When the property increases in value, your shares increase too. You can sell your shares at a higher price. Another option to earn is keeping the shares and getting dividends, a form of passive income.
In any investment, the overall goal is to generate income. With REIT, rental income is generated and distributed to investors as dividends.
What are the advantages of REITs?
1. Affordable and Accessible
Investing in REITs is a great option as it offers a more affordable and accessible way to earn from significant properties without paying the entire cost. In addition, you gain exposure to different real estate assets without buying the properties directly. Isn’t that smart?
2. High dividend yield
REITs offer a high dividend yield which is very attractive to investors.
Legally, REITs are required to distribute at least 90% of their taxable income to their shareholders in the form of dividends. This means that investors can receive a regular income stream from their investments, which is particularly attractive for those seeking a source of passive income.
3. Diversified portfolio
You get exposure to a diversified portfolio of real estate assets compared to investing in a single property which is highly risky. A diversified portfolio means a collection of various types of investments. You ‘spread’ your money across different investments such as bonds, real estate, private equity, etc. This setup helps reduce the risk of losing money and potentially increase returns.
4. High liquidity
REITs provide liquidity for investors. REITs are publicly traded on stock exchanges, meaning investors can easily buy and sell their shares. This provides flexibility for investors.
5. Long-term capital appreciation
REITs offer the potential for long-term capital appreciation. This means real estate properties tend to increase in value over time. The primary objective of a REIT is to produce rental income, but the value of the underlying assets can also appreciate. As a result, investors can reap the benefits of income generation and capital growth.
What are the four types of REITs?
REITs have four major types:
- Equity REITs – REITs are mostly publicly traded equity REITs. They operate or own income-producing real estate like apartment complexes or office buildings.
- mREITs – Mortgage REITs finance income-producing real estate by purchasing mortgages and mortgage-backed securities and gain income through the interest on the investments.
- Public non-listed REITs are registered under the SEC but not traded on the national stock exchange. Public non-listed REITs may have limited liquidity.
- Private REITs – With private REITs are not traded on the national stock exchange and are exempt from SEC registration. Private REITs are sold to institutional investors.
How different or similar are REITs from other investment options?
Know more about REIT investing. Check out the similarities and differences between REITs with mutual funds and stocks.
| Investment Types | Similarities to REIT Investing | Differences from REIT Investing |
| Real estate investing | Both investments allow investors to own properties. | Real estate investors have to cover the total cost of the acquired property. REIT investors pay only a tiny fraction of the property value through shares. |
| Mutual fund investing | Funds from individual investors are pooled and managed. | Mutual funds are invested in money market funds, bonds, or stocks. REIT shares are limited to real estate assets. |
| Stock investing | Shares are traded on the stock market and can be purchased by investors. Investors own a piece of the publicly traded company. | Stock investors get shares from different companies, while REIT shares are limited to real estate. Stocks may or may not pay dividends to shareholders, while REITs are required by law to pay dividends. |
Source: Grit.ph
Online REIT Brokers in the Philippines
Have a look at the comprehensive list of brokers in the Philippines. Investors can buy and sell REIT shares using their online platforms.
| Online REIT Brokers | Minimum Investment | Online Trading Platform |
| A&A Securities Inc. | Php 50,000 | https://aa.psetradex.ph |
| AAA Southeast Equities, Inc. | Php 20,000 | https://aaa-equities.com.ph |
| AB Capital Securities, Inc. | No minimum deposit required | https://www.abcapitalsecurities.com.ph |
| Abacus Securities Corporation | Php 100,000 | https://mytrade.com.ph |
| Alpha Securities Corporation | Php 5,000 | https://alpha.psetradex.ph |
| AP Securities Incorporated | Php 50,000 | https://www.aps.com.ph |
| Astra Securities Corporation | Php 500,000 | https://astraseconline.psetradex.ph |
| BA Securities, Inc. | Php 5,000 | https://baseconline.psetradex.ph |
| BPI Securities Corporation | No minimum deposit required | https://www.bpitrade.com |
| Coherco Securities, Inc. | Php 50,000 | https://cohercotrade.psetradex.ph |
| COL Financial Group, Inc. | Php 5,000 | https://www.colfinancial.com |
| DA Market Securities, Inc. | Php 50,000 | https://itrade.ph |
| Eastern Securities Development Corporation | Php 5,000 | https://eastern-sec.com |
| F. Yap Securities, Inc. | Php 25,000 | https://www.2tradeasia.com |
| First Metro Securities Brokerage Corporation | No minimum deposit required | https://www.firstmetrosec.com.ph |
| Globalinks Securities and Stocks, Inc. | Php 20,000 | https://gtrade.ph |
| HDI Securities, Inc. | Php 25,000 | https://hditrade.psetradex.ph |
| Investors Securities, Inc. | Php 50,000 | https://www.investorsonline.ph |
| JAKA Securities Corporation | Php 25,000 | https://jakaseconline.psetradex.ph |
| Lucky Securities, Inc. | Php 5,000 | https://luckyseconline.psetradex.ph |
| Maybank ATR Kim Eng Securities, Inc. | Php 1 million | https://maybanktrade.psetradex.ph |
| Mercantile Securities Corporation | Php 5,000 | http://msc.com.ph |
| Meridian Securities Incorporated | Php 20,000 | https://msitradeonline.psetradex.ph |
| Optimum Securities Corporation | Php 25,000 | https://optimumonline.psetradex.ph |
| Philstocks Financial, Inc. | Php 5,000 | https://www.philstocks.ph |
| RCBC Securities, Inc. | Php 10,000 | https://www.rcbcsec.com |
| Regina Capital Development Corporation | Php 25,000 | https://www.reginacapital.com |
| Timson Securities, Inc. | Php 20,000 | https://timson.com.ph |
| Triton Securities Corporation | Php 10,000 | https://triton.psetradex.ph |
| UCPB Securities, Inc. | Php 10,000 | https://www.ucpbsec.com |
| Unicapital Securities Inc. | Php 10,000 | https://utradeph.com |
| VC Securities Corporation | Php 10,000 | https://vcsecurities.biz |
| Wealth Securities, Inc. | Php 20,000 | https://wealthsec.com |
Source: grit.ph
