Buying an investment property or REIT?

If you are considering investing in a residential property and renting it out for rental income, consider investing in REIT.


In my previous posting, I wrote about REIT. A Real Estate Investment Trust (“REIT”) raises capital to purchase primarily real estate assets, usually with a view to generating income for unit holders of the fund. It allows individual investors to access real property assets and share the benefits and risks of owning a portfolio of property assets which typically distribute income at regular intervals.


Investing in residential property on your own requires a large sum of money and possibly a mortgage loan from a bank. Buying and selling the property require a substantial length of time as the property is immobile and cannot be converted into cash immediately, unlike equity shares. Furthermore, as landlord, you have to worry about getting tenant for your property. Tenant can be demanding and you have to maintain the property in livable working order. This can take up a fair amount of your time and can be a hassle.


Investing in REIT allows you to leave the worries to the professional managers who are in this business to ensure the properties are rented out and they attend to repairs associated with the properties.

You have a viable alternative.


Written on 8/22/2007 3:28 PM


Copyright © 2007, the author known as LKT in Singapore.


The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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