Why Invest in REITs?

Imagine you were looking for ways to invest in real estate, but also dealing with maintenance and property management that doesn’t really appeal to you. 

That’s where Real Estate Investment Trust (REIT) helps you to stay engaged.

REIT will do all the heavy lifting for you. They handle everything from buying a property to managing it. What’s great about REIT is that they pool money from lots of investors, so you can gain exposure to massive real estate projects.

Your investment portfolio becomes diversified, as REITs don’t always move in the same direction. It’s a simple way to dip your toes into the real estate market.

Benefits for Investors:

• Lower Your Risk with Multiple Properties:

REIT allows their investors to invest in multiple properties, and this will lower the risk. The properties may be residential spaces, malls, or office buildings. 

So you are not relying on just one property to make or break your investment.

• Passive Income:

Now, here’s where investing in REIT gets even more better. REITs are fantastic in generating passive income. Investors get regular payout from 90% dividends of REITs profit.

Do get payouts just by holding shares.  Compared to other traditional stocks it’s way too high.

• Accessible Investment

It’s a real and biggest hurdle to have a massive upfront cost before entering real estate. But with REITs you don’t need to be a millionaire. 

Through your regular brokerage account you simply need to buy shares by investing a small amount of money. You were in a win-win situation by owning a slice of big real estate projects.

• Liquidity:

Let’s say you need quick access to cash. Willing to sell your property but it takes months of hustle. But if you go with REIT, selling a property is like selling a stock. On the stock exchange you can buy or sell your shares.

• Professional Management:

REITs experts know how to maximize the performance of their properties. So you were not here to deal with the nitty-gritty of property management. It’s a big plus point for investors.

• Avoid Double Taxation: 

REITs avoid the double taxation issue, so are tax efficient. Investors get more money in their topic when dividends are distributed. More earning you get compared to investments in regular corporations.

Benefits for Businesses:

So if you are the one who is running a business, and looking for ways to raise capital for growth and expansions. And you are going with traditional methods of finding private investors or taking out loans. 

What if I told you about the smartest ways to generate funds. Answer is REIT, offering multiple businesses a new world of opportunities.

• Efficient Fundraising:

Let’s think about it, instead of selling off property or taking out bank loans. Your company can convert its real estate into shares that are traded on the stock market. An efficient way to raise capitals. 

• Market Expansion:

If you want your business to expand in new markets without managing all those properties. Then REITs help your company to enter those booming sectors without any management. And you get better exposure.

• Boosting Reinvestments:

REITs reinvest large amounts of their earnings back to their properties. Thus, REITs really shine for businesses. For you as a business, it means your assets keep increasing their value without depreciation risk. 

• Corporate Level Tax Exemptions:

 It’s just a win-win situation, when considering financial flexibility and fewer tax burdens of your business. REITs don’t have to pay corporate income tax and so can be used for reinvestments or pass on to shareholders. Your business is scaling up without any tax implications.

• Economic stability:

Investing in REITs is a ripple effect, as they not only boost your business but also contribute to economic stability. Fueling in REITs improved infrastructure, urban growth and created jobs for others.

Benefits of Investing in REITs in Pakistan:

Investing in REITs in Pakistan opens up exciting opportunities for diversifying portfolios and accessing the real estate market. Here are some key benefits:

• Regulatory Framework: The SECP introduced it in 2015, allowing structured investments in properties that generate income.
• Democratized Access: Smaller investors can finally reach those high-quality real estate assets that used to be the monopoly of bigger investors.
• Market Liquidity: Active trading of the shares in stock exchanges enables investors to more readily enter and exit the market.
• Economic Growth: REITs are the major contributor to ensuring economic stability and growth of the real estate market.

How to Invest in REIT?

Step 1: Open a Brokerage Account

First of all, to invest in REITs, open a brokerage account. You can either go for an online brokerage platform, or you can choose another traditional institution. Come forward with your personal details, verify your identity, and pay the amount to fund your account. Now that you are all set, you can very well trade the shares of REITs like other stocks.

Step 2: Research Available REITs

Do your research in the available REITs before investment. One such leading example is the Sapphire Bay Islamic Developmental REIT- Lahore that invests in a portfolio comprising high-quality commercial properties.

Understand the underlying assets, management, and performance history to make informed investment decisions.

Step 3: Buy Units at Market Prices

Buy or sell at market value the chosen REIT through your investment brokerage account. Trading takes place at current market price; this is one of the most salient advantages of public REITs, being able to buy and sell with a great deal of immediacy.

Step 4: Participate in Private Offerings

Along with public trading, research private placements of new REITs or additional shares. This is a fabulous way to participate in lucrative investments before they reach the general market.

Step 5: Consider Tax Implications

The REIT regime does provide exemption from various taxes, subject to distribution of at least 90% of its taxable profits as dividends. Understanding these distributions will facilitate the optimization of your general investment strategy.