If I wish to invest in commercial or industrial, would REITs be an equivalent instead of owning the property directly? Are REITs a better choice compared to property investment? - Seedly
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Anonymous

Asked on 25 May 2019

If I wish to invest in commercial or industrial, would REITs be an equivalent instead of owning the property directly? Are REITs a better choice compared to property investment?

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Cedric Jamie Soh
Cedric Jamie Soh, Director at Seniorcare.com.sg
Level 9. God of Wisdom
Answered on 03 Jun 2019

1) Yes to your first question

2) Yes to your 2nd question

REITS'

a) dividends are non taxable

b) do not need you to manage the property

c) do not need you to stressed if 1 or 2 units are not rented out

d) a better management of leverage and loan ratio.

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Davin
Davin
Level 7. Grand Master
Answered on 26 Feb 2020

I did a simulation by comparing owning a physical industrial property vs buying REITS, the result show that if u can get above 6% yield from REITS, then it's better than owning physical pty. Plus there r many risk associate with physical pty like vacancy rate, gov ruling, ageing property, rental default. All these will eat into yr return.

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MT2020
MT2020
Level 7. Grand Master
Answered on 26 Feb 2020

Reits is a better choice if you do not have enough capital to buy a second property. Investing in reits allow you to own a part of many different buildings and collect rents from them.

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Ryan Ong
Ryan Ong
Level 3. Wonderkid
Answered on 11 Jun 2019

Property provides a higher degree of leverage, given that you can get LTV ratios of about 70% quite easily. REITS require you to use entirely your own cash.

On top of that, you have little control over the investment when it’s a REIT. Even if it’s run into the ground, the manager isn’t going to pay back a single dollar of the fees.

With direct ownership of the property, you can decide how much goes into asset enhancement, who the tenants are, whether each expense is really ncessary, and forth.

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Hi, Douglas here, 2nd Keynote speaker.

I won't say it's an equivalent as REITs and actual ownership of properties are 2 different things altogether.

IF you were to invest in REITs make sure you anaylse it like any regular stock. Analyse its assets, how they are positioned and the risk they face. Not all REITs perform, Some underperforming ones are ESR, AIMS AMP etc where reits holder suffer drop in share price and DPU.

Reits definitely have lower cost to entry, so worth considering but always do your homework. Don't buy into any REIT blindly. REITs can go bust too.​​​

You can always connect with me via https://www.facebook.com/douglas.chow.908 or simply whatsapp/sms my company 24/7 hotline @83324283

Remember, plan your finances properly, don’t overstretch, do your homework and enjoy your property investment journey.

Regards

Douglas Chow

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