Property Investing Without a House – REIT

Property Investing REIT Blog Banner

With the financial barriers getting into the property market getting increasingly larger, many people are having difficulty putting down a deposit. Getting your hands on a house to invest in is tricky, especially in metropolitan areas. That is where the market solution of a REIT could help, allowing people to invest in property without having to front up the large costs. In Property Investing Without a House – REIT, our experts touch on what a REIT is, what are the pros and cons of investing in these, and the market environment they are operating in.

What Is a REIT?

A REIT, or a Real Estate Investment Trust, are companies that own a range of income-producing real estate across a range of locations and property types. Investing in a REIT is a way for those who cannot afford a deposit to capitalise on changes in property prices. REIT’s don’t just invest in domestic property, however. They can also invest in commercial property, cell towers, hotels and more!

Benefits of Investing In a REIT

A REIT is usually a less expensive way to capitalise on the changes in property prices. Investors do not need to put together a deposit, mortgage lender’s insurance, stamp duty or any of the other expenses that are incurred when purchasing a property. A REIT is also usually diversified across multiple properties. If an area or type of property were to go down in value as a result of an external factor, this loss would be offset by gains from other assets. 

REIT’s also allow investment into different types of property that are usually too financially inaccessible. If you want to invest in a commercial suite, an apartment block or larger infrastructure, this can be achieved through a REIT.

Negatives of Investing with a REIT

The biggest negative of investing in a REIT is its difference from purchasing your own property. You do not have a significant influence over what properties the REIT chooses to invest in. You will also receive no ongoing rental income, with you potentially getting dividends instead.

REIT’s also tend to follow general property market trends. If the market experiences a downturn, that will negatively affect your shares.

The REIT Market

There’s a lot of considerations that you need to make when investing in REIT’s, as different aspects of the property market are being subjected to a range of short and long-term factors. The commercial real estate market is being affected by the shift of more people working from home, and the rise in e-commerce. The domestic real estate market is in a boom, with regional shifts and growth in outer metropolitan areas (Western Sydney, Greater Brisbane). New apartment blocks in metropolitan Sydney are being deemed as a more risky investment due to the recent structural issues affecting these types of projects. 

With these issues outlined in Property Investing Without a House – REIT, it is paramount that you seek appropriate counsel with any plans for your investments. Vision Property and Finance has had years of experience in this field, and have helped hundreds of clients appropriately arrange their finances. If you would like an expert opinion on REIT’s, get in touch with us here.