ALL ABOUT A REIT

by Darrin DeRoches October 29 - November 4,2009

There is a way to invest in real estate without buying a house or even land. You buy a REIT. Invest your money in real estate without the noisy neighbours or pain in the ass tenants. Just take your downpayment and buy a REIT. Sit back and enjoy the security of a real estate investment with no hassle or worries. One problem is you cannot live in a REIT; it is not a new kinda Swedish log home thingy, it is a mutual fund. REIT stands for Real Estate Investment Trust, an investment fund that takes your money and invests it in a particular type of real estate. You can invest in a hotel REIT, apartment REIT, offices, retail, etc. You are investing in a fund that buys real estate, manages it and pays a dividend. Most pay out monthly and brag about an eight per cent return paid monthly. A minimum of about five grand gets you into a fund and you can drive around and look at the properties a fund is holding and feel, touch – and even smell, if you want – where your money is. A board of professionals decides to pool your monies and buy more properties, usually similar properties, and make your money grow. Your security is real estate! I am the first person to agree that stock markets are bullshit, but with REITs, you are investing in “bricks and mortar”, not stocks and useless paper or hedge fund lunatics. You are investing in a management team who have a proven track record and successful properties behind them. You can join in a group and buy small or large properties which will make money and pay monthly dividends. You can get in or out with ease, and as we have seen in history, real estate may slow down but it continually goes up, and so does your investment. All of this with no maintenance headaches, risk, or personal guarantees. You invest in real estate without the hassles. There are private REITs and public ones. I would suggest looking at the private ones, since their strength is in their assets, where public ones get into the stock market bull and will fluctuate with the rise and fall of the stock market. If you considering investing in a REIT then you need to pick one – hotel, industrial, retail or apartments? Apartments are your safest bet since people need a place to live and when times get tough rentals go up. Hotels and retail fluctuate with the market, but apartments stay pretty steady. So you can’t live in a REIT but the money invested in one may grow enough to enable you to buy that bigger home or even a second one. Invest in real estate one way or another. V [DARRIN DEROCHES] Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca