Sunday, September 26, 2010

How to earn Passive Income from Real Estate Investment Trust?

Most of people not aware of advantages of REIT investment which cover all types of industries, high dividend yield of about 7% to 8% annually, low entry cost, support by higher corporate governance. The best is you as an investor, no need to predict or ask if tomorrow market ups or down, just think long term. 
If you have FD in bank or bond as one of investment, it's advisable to move portion of fund into REIT to earn higher return.

What Is Real Estate Investment Trust?
A pool of money from investors is invested in properties, i.e. office building, shopping malls, warehouse ... and managed by REIT managers. (For detail of M-REIT, click here)

What REIT can offer?
- advantage to invest in property market and enjoy diversify in many types of industries instead of invest in a single physical property.
- maintained and managed by experience property managers, maximize the operating income of properties
- ownership of high quality real estate

Why invest in REIT?
- liquidity - REIT can be bought and sold easily today or tomorrow
- high dividend distribution, 90% to 100% of rental given back to investor and tax efficiency, where investors are tax only once.
- affordability - investor can buy a small portion with low entry cost

How to make money with REIT?
- passive income - sustainable distribution of dividend which pay quarterly or half yearly.
- take advantage of inflation - rental generally increase in tandem with inflation rate, this long term growth of distribution will not happen for FD or bond
- potential capital appreciation - though this is not guarantee, but usually properties will increase in value every year.
- the beauty of stock market - at time when fear control the market, everyone keep on selling their stock, hence it's great opportunity for us to buy these cheap "properties", like supermarket doing cheap sales!
Every market down trend is a great opportunity for us to make money in REIT.

Can I apply loan to buy REIT?
Yes, but not all bank provide such facilities. Bank normally provide housing loan (physical property).

6 comments:

  1. may i know which bank have provide loan for REIT ???

    ReplyDelete
  2. Hi nsp,
    Last year, HLB do provide this kind of loan, but not sure if still available after 2010.

    ReplyDelete
  3. Hi Vincent,
    Do you know how to register an online share account to buy REIT?

    ReplyDelete
  4. Yes, I can open trading account for you, can you email me your h/p?

    ReplyDelete
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