If you think that real estate is a safe and profitable investment but don't have the capital to acquire a rental property, buying shares in real estate investment trusts can be a good alternative. We have listed 6 good reasons for you to invest in REITs.
The first good reason to invest in SCPI is the accessibility of this investment. Unlike buying real estate, buying shares in real estate investment trusts does not require a significant down payment.
Investing in paper property, particularly in an SCPI, allows you to make a real estate investment with a modest entry ticket.
Each share is worth on average between €150 and €1000, so you don't need to have a substantial capital to start investing in this type of placement.
The second good reason to invest in SCPI is to avoid the worries related to the management of your real estate assets.
Real estate investment trusts are managed by professionals in this sector. The difference with direct real estate purchases is that you don't have to deal with the daily management of the assets, their maintenance, accounting, or tenant search.
The company's managers take care of everything on your behalf, which represents a significant time savings and peace of mind.
Real estate investment trusts (REITs) have the additional advantage of providing diversified investments.
By purchasing shares in these types of companies, you diversify your real estate portfolio without having to directly buy different types of properties. You become a co-owner of an already diversified real estate portfolio that can include residential properties as well as offices, retail spaces, and hotels...
This diversification helps reduce risk associated with owning a single property and serves as another compelling reason to invest in REITs.
Real estate investment trusts allow you to share the profits and risks of investing in real estate with other investors.
By purchasing shares in a fund that owns and manages a portfolio of properties, you can receive rental income based on your participation, which is another good reason to invest in REITs.
This investment allows you to earn regular income in the form of rent, without having to personally manage the various properties. You can enjoy the benefits of investing in real estate without the drawbacks of property maintenance and management.
Real estate investment trust shares constitute a long-term investment that is good to hold for many years.
However, their increased liquidity compared to real estate properties is another advantage. It is easier to buy or sell REIT shares than physical real estate properties.
The liquidity and flexibility of this investment are another good reason to invest in REITs. They will allow you, for example, to more easily sell your shares if you need liquidity.
The last of the 6 good reasons to invest in SCPI is the possibility to benefit from leverage. As a reminder, leverage consists of using debt to increase one's investment capacity and the profitability of their investment.
Managers of real estate investment trusts often resort to borrowing to acquire new properties, which increases the potential return on your investment.
On your part, you can also buy SCPI on credit to take advantage of this leverage while diversifying your real estate portfolio.
Author Audrey on 12 April 2023
Economy and Finance : Insurance
Author Audrey on 27 July 2023
Economy and Finance : Finance