Advantages of REITs
REITs offer a number of benefits to investors which include:
1. Liquidity: The shares of REITs can be easily sold on the stock exchange market, making it easy for the investor to withdraw as per their will and need. but Non-traded REITs are illiquid. Unlike publicly traded shares, you can’t easily sell them on an open market.
2. Diversification: REITs allow investors to diversify their portfolios by investing in different classes of real estate assets. This help investors scatter the risk into different categories of assets.
3. High Dividend Yields: As per the law, REITs are required to distribute 90% of their taxable income as dividends to shareholders making it a High dividend-yielding investment channel.
4. Access to Real Estate: REITs enable the investor to access the real estate without actually buying and owning the physical property. When an investor buys a share of REITs, they buy a part of the underlying property held by the REITs.
5. Professional Management: REITs are managed by professionals who are experts in real estate management, which leads to better investment decisions and higher returns.
6. Capital Appreciation: The value of properties held by REITs appreciates with time, giving an opportunity to the investors to grow the value of their capital in the long run.