facebookWhat are the pros & cons of buying REITs as opposed to physical properties? - Seedly

Jonathan Ng

Penultimate Economics Undergrad at Singapore Management University

03 Jun 2019

SeedlyTV

What are the pros & cons of buying REITs as opposed to physical properties?

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Discussion (3)

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Cedric Jamie Soh

03 Jun 2019

Director at Seniorcare.com.sg

Pros: Your dividends from REITS is not taxable.

You can have a diversified portfolio compared to.. whats the most number of property you can own now?

You can start with a small sum: $200? $500?

The costs of managing properties are largely tied to economics of scale, REITS save you money.

You don't need to manage those properties on your own.

CONS:

so much harder to sell a course teaching pple how to buy reits compared to "how to buy 34 properties with no money"

Goh Kah Kiat

24 May 2019

Editor-in-chief at Risknreturns.com

Pros:

  • Higher yields at current market conditions
  • Ease of Research due to publicly available financials
  • Generally lower leverage than buying a single property
  • More diversification as you are buying a portfolio of properties over a single property
  • Lower capital requirements as you can get started on REITs for below $300
  • More liquid as you can buy and sell as and when the market is open
  • No property management headaches like maintenance and repairs, looking for tenants, etc.
  • Income tax advantage as REIT distributions are not taxed on individuals, while rental income does.
  • These pros are summarised in my article here.

Cons:

  • Hard to find bargains due to ease of research
  • Potential bad REIT managers. There are good REIT managers and there are bad REIT managers. It takes time to analyse management behaviour to see who falls within which category
  • Potential capital raises through rights issues may come at a time when you have no extra cash on hand

Ashley Wong

23 May 2019

Financial Assistant at Multi Management & Future Solutions

Pros:

  • REITs pay higher dividend yields.
  • REITs help to diversify an investment portfolio.
  • REIT...

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