Learn more about Real Estate Investing and REITS

Learn more about Real Estate Investing and REITS

The real estate market is one of the most lucrative investment opportunities available. However, it can be tricky to invest in real estate without the right information. Here, are some reasons why investing in REITS or real estate may be better for you.

Ready? Let’s go!

Understanding Real Estate Investing

Real Estate Investing entails buying properties. Yes, your investment comes by buying various real estate. Then you earn returns by either leasing the property out or selling it. 

It’s generally a great choice as the property remains yours over a period. If planned correctly, you can recoup the purchase price. And then, still make a profit.

Getting to Know Real Estate Investment Trusts (REITS)

While Real Estate Investing is more popular, the same might not be the case with REITS. As such, you might just be wondering what all this about.

Real Estate Investment Trusts (REITS) is quite simple. It involves investing through a Trust company. They are a publicly listed company that owns and manages real estate.

They make the actual investment decisions for you and help you generate income. All you need to do is to join an online brokerage through which you can invest in properties.

Real Estate vs REITS

You’ve learned that you can make real estate investments through Real Estate Investing and REITS. 

However, it might be impossible for you to maximize both ways, especially considering financial limitations. So, are you wondering which of them is your best bet?

Don’t worry, we’ve got you covered. Here are nine issues to consider that’ll help you make the best choice depending on your situation.

1. The Ease of Doing Business

When you think of Real Estate vs. REITS, the first thing to consider is the ease of investment. That is, how much effort or stress goes into investing.

Well, to invest in REITS, all you’ll need to do is join an online brokerage agency. Afterward, you can purchase shares in the company, and you’re good to go. 

The great thing is that you don’t have to do a thing again. The trust company manages the property, makes a profit, and gets your money to you. Great right?

On the other hand, when it comes to Real Estate, there are loads of drama involved. You’ll need to buy the property yourself. Then when you’re ready to sell, find a buyer yourself. You’ll even have to concern yourself with various legal issues. 

So, if you’re looking for ease, it would be best to go for REITS over Real Estate.

2. The Money Requirement

Money is the basis of real estate investment. As such, Real Estate or REITS, you’ll require cash. 

However, if you’re looking for more financial stability after investment, you might want to go for REITS. This is because, just as in company shares, with REIT, you can purchase a little amount.

On the other hand, you’ll need to pay in full when it comes to Real Estate. And this is usually a minimum of $100, 000. 

3. The Investment Duration

When it comes to the speed of investing or earning in Real Estate or REITS, you might need to pick REITS. This is because REITS allows you to invest as soon as you’re ready.

There’s no technical delay; you don’t need to find a seller yourself. You can just get straight to investing. You also don’t need to worry about spending long hours negotiating and convincing a seller.

You don’t also need to spend months looking for the perfect buyer. Instead, each year-end, you get returns. 

4. Administration of Property 

Next, consider your experience in property management when thinking of Real Estate vs. REITS. If you’re not so experienced, REITS is your best bet. This is because you don’t have to manage the real estate yourself.

Unlike in Real Estate Investing, with REITS, you get an expert team managing the property. Their responsibility is to help you to acquire, finance, and then manage the property. All you need to do is to pay a fee for property administration.

5. Preference for Property Type and Tenancy

If you’re looking for control, then in Real Estate vs. REITS, it would be best to go for REITS. 

Unlike in REITS, with real estate, you decide the property you want to buy. You also decide who you want to rent it out to. And of course, when you want to rent it out. 

This isn’t the case with REITS. The management of the REIT makes every investment decision. 

6. Dividends/ Returns on Investment

If you’re looking for higher returns, then in Real Estate vs. REITS, it might be best to go for Real Estate.

This is because it’s generally easier to purchase a property well below the market price. All you need to do is scout properly and negotiate with the intent to do so.

In turn, you can lease the property and earn reasonably. Then when the property appreciates, you can still sell it above the purchase price.

On the other hand, this is almost impossible when it comes to REITS. The market is more regulated. As such, the pricing is usually at market value.  

However, if you’re looking to take a loan, REIT might be a better option. This is because property investments are more leveraged than REIT. If you’re looking for more insight into this, you can reach out to us.

7. Duplication of Properties

Have you ever acquired a property? For those with prior experience, you will understand better that it’s challenging to acquire a property.

This is where REIT tilts over the Real Estate option. It’s quite easier to acquire more properties through REIT than direct real estate investment. 

REIT allows you to have different types of properties in so many locations in Singapore. After all, you’re only buying little bits of the property and not paying the whole purchase price.

8. Risk Associated with Investment

If you’re looking for less risk, then in Real Estate vs. REITS, it would be best to go for REITS. This is because when you choose REITS, you’re investing in a publicly quoted company. And this naturally comes with more security for your investment.

However, if you’re one to enjoy high-risk investments, real estate works just fine for you. Here’s the silver lining. As we stated earlier, you tend to earn more.

9. Taxes

If you’re looking for tax advantages, then you might want to go for REITS. This is because you don’t get taxed for your REITS gains.

On the other hand, you’ll need to pay property tax if you choose Real Estate. There’s also the Stamp Duty payment. 

Final Thoughts

We have placed Real Estate vs. REITS as investment options. Although real estate provides better returns, it can be quite challenging to manage. That’s where REITS comes in. It allows you to earn with ease and low capital requirement.

So, in case you find real estate investment amusing. And you’re looking to invest in any of the categories above. We can help you. Drop me a message, and let’s talk about it in detail.

Leave a Comment

Your email address will not be published. Required fields are marked *