Real Estate Investment Trusts (REITs) have democratized real estate investing. You no longer need millions of pesos to own a stake in prime commercial properties. With a few thousand pesos, you can buy shares of a REIT on the stock market.
How it Works
REIT companies own and operate income-generating real estate like office towers and malls. By law, they must distribute at least 90% of their distributable income as dividends to shareholders. This provides investors with a regular stream of passive income.
Benefits of REITs
- Liquidity: Unlike physical property, you can sell REIT shares instantly during market hours.
- Diversification: You effectively own a small piece of multiple properties.
- Professional Management: The properties are managed by experts.
Risks to Consider
Like any stock, REIT prices can fluctuate. They are also sensitive to interest rates; when rates rise, REIT yields may become less attractive compared to bonds.
