What are Real Estate Investment Trusts?

by | Nov 23, 2018 | Reits | 0 comments

REITs, or Real Estate Investment Trusts, are companies listed in the stock market, so you can buy and sell their shares. However, REITs use your money to manage and rent properties rather than for running a business. They can get access to credit by asking money to banks (debt) and to shareholders (equity).

Why are Real Estate Investment Trusts so attractive? Because the majority of the rental they get is paid to shareholders as dividends, usually quarterly or every 6 months. In Singapore, you can expect a 5-7% in dividends, and tax-free!

Hence, if your objective is to create a passive income portfolio you can then consider REITs. At the same time, bear in mind that like normal stocks their price can move, even a lot sometimes (see this article for an example).