The acronym REIT stands for Real Estate Investment Trust (REIT) and refers to a real estate investment vehicle or investment approach that owns and manages real estate assets for investors. This comes in short or long-term investment opportunities for investors.
It provides a unique opportunity for investors to invest in real estate without directly having the real estate asset. Through the stock exchange market, REITs offer stocks on the open market to raise short and long-term capital for real estate acquisition, development, and management.
In all economies of the world, REITs remain one of the greatest security and wealth creation investment vehicles that is available for investors. There are several factors why investors and players in the real estate space should consider great investments through REITs.
Not all individuals or investors can afford to acquire a modern real estate asset that is highly capital intensive. Still, REITs allow investors to be part of great real estate assets by investing in smaller units of property. This is one major characteristic that REITs have over other real estate investments.
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Implicit trust, integrity, and information flow are associated with REIT investments. They are centrally and openly traded on the stock exchange market where an investor can monitor their investments. In most developed economies of the world, REIT investments can be monitored almost daily through the electronic channels of the stock exchange. This is one of the reasons why investments in REITs are secured, even amid economic turbulence and macroeconomic instabilities.
On tax exemption, every property owner pays property tax to the government. The types of property taxes vary in different climes. In some countries and even in states in Nigeria. Property owners and managers are double-taxed. But in REIT investments, it is a different ball game. Investors do not pay property taxes. Thus, the maximization of investment profits is devoid of taxes.
The return on Investment (ROI) for REITs investors is huge and presents an opportunity for portfolio diversification. Investing in REITs is a great way of diversifying your portfolio. In addition to the stocks and bonds being held by the investors, it attracts regular dividends and long-term capital appreciation.
REIT gains and bonds are paid as wished by the inventors. In some cases, it is monthly, quarterly, or yearly basis. This is another factor that makes REIT investments appealing to investors. Money invested on REITs assets are liquid money, which makes the investment less risky and accessible.
REITs will remain a very viable option in the real estate investment value chain. Unfortunately, the campaign and awareness for this real estate investment opportunity is poor and not far-reaching. Real estate professionals, investment bankers, and mortgage bankers should up their games in this regard. As the popular saying goes “The only investment that is real is real estate” and REITs provide a window of opportunity for everyone to actualize their real estate investment desires.
Yamma Sani Bashir, a registered Estate Surveyor and Valuer writes from Abuja, Nigeria
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