REIT : A good investment?
- Max Faller
- Feb 13
- 2 min read
What is a REIT?
A REIT (Real Estate Investment Trust) is a collective investment vehicle that raises funds from numerous investors with the goal of acquiring and managing a real estate portfolio for rental purposes.
In simpler terms, when you invest in a REIT, you become an owner of a share in the real estate portfolio held by the REIT. In return, you receive dividends (monthly or quarterly) generated from the rents of the properties owned by the REIT.
Many people invest in REITs due to inflation, which leads to higher rents and, consequently, increased returns for REIT shareholders.
How does a REIT work?
A REIT is created and managed by a management company. This company sells REIT shares directly to individuals or through intermediaries like banks, and then invests the collected funds in the acquisition of various real estate properties. Its role includes finding tenants, conducting inventory checks, and ensuring the payment of income to investors in the form of dividends.
How to invest in a REIT?
To invest in a REIT, you need to purchase one (or more) shares of the company's capital. Our advisors are here to help you select the REIT that suits your profile. You will need to define the initial payment as well as the monthly installments that will be incorporated into the overall strategy.
Characteristics of an REIT
The characteristics of the REIT mirror those of real estate, with entry fees ranging from 10% to 12% and a waiting period between one and six months.
There are two major fees to consider when investing in a REIT:
Subscription fees: These are calculated based on the price of the share at entry and are applied upon exit.
Management fees (annual or quarterly): Usually between 8% and 12%, these fees are paid to the management company. These fees are directly deducted from rental income, so you receive the net rental income as an investor.
Advantages of investing in a REIT
One of the main advantages is that it is accessible to everyone, as it does not require a large capital. The REIT allows you to invest in real estate without worrying about property management, maintenance, insurance, regulations, and especially the time required for real estate management.
Additionally, it is a great way to diversify your investments across various types of real estate (retail, healthcare, office, hospitality, etc.). The diversification is also geographical, as our selection is implemented internationally, which helps reduce the risk of fluctuations. The average returns range between 4% and 6% per year.
Note: Dividends are subject to income tax and must be declared as property income.
Conclusion
The REIT is an integral part of the wealth management strategy, offering an excellent risk/return ratio that has pleased our clients for over twenty years.
We are at your disposal to assist you with your investment project.