A little-known real estate investment vehicle in the U.K. is the real estate investment trust (REIT). In this article, we’ll discuss this method of property investing and present some information you might find useful if you’re considering investing in a REIT.REIT BasicsThe first thing to know about a REIT is that it’s a way for corporations to buy investment real estate in way such that their corporate income taxes are reduced or eliminated. REITs are required by law to distribute 90% of their income, a fact that makes them very attractive to real estate investors. REITs are similar to mutual funds for stock investments, except that they function with real estate rather than stocks. Since mutual funds are safer investments than buying individual stocks, REITs are safer investments than buying individual pieces of real estate property. They’re great ways to buy investment property without all the risk and expenses associated with direct ownership.Types of REITsREITs are similar to corporations in that they can be held publicly or privately. If publicly held, REITs can be listed on public stock exchanges in the same way shares of common stock in corporations are listed. There are 3 types of REITs: equity, mortgage and hybrid. Equity REITs involve ownership of and investment in real properties and their income comes primarily from the rents charged on these real estate investments. Mortgage REITs involve ownership of and investment in property mortgages. Their income comes from the interest they earn on mortgage loans. Hybrid REITs generate income from both real estate investing and making mortgage loans.Features of REITsIn the U.K., real estate investment in REITs is governed by the Finance Act of 2006. The legislation became effective in January of 2007. At that time, REIT status was granted to 9 property companies in the U.K. Key features of REITs in the U.K. include the following:The company must be located in the U.K. and must be listed on a recognized stock exchange.A single person or entity cannot hold the majority of the shares in the company. A single person or entity cannot hold more than 10% of the shares.The property-letting activities of the REIT must comprise at least 75% of the company’s overall business activities, including both income and assets.Investors must receive at least 95% of the REIT’s net taxable profits, but the REIT must withhold any applicable taxes.Reasons to Invest in REITsProperty companies that convert into REITs will benefit substantially from both the tax exemption and the increased ability to generate income via the stock market. Investors benefit because they gain access to the asset class property investing with its significant dividend returns. REITs also provide good diversification, a must for any serious investor. So, if you’re looking to introduce some diversity into your holdings, consider the real estate investment known as a REIT in the U.K.
Real estate is one of the many possible ways of making money. Whether from investing or from being a real estate agent, many people are making a lot of money from the industry and if you have the desire to join them then you need to understand the business. Before you can invest in real estate there are several things that you need to know. Firstly, real estate is a long term investment. Secondly, you require a huge sum of money to invest in property, unless you are planning to earn money from being a real estate agent, and lastly the property you invest in needs constant management. The bottom line is you need to make a commitment in both time and money to succeed in the real estate business.Strategies Of Making Money In Real EstateThere are many things that you can do to make money from real estate, and you only need to find the channel that works for you.1. Buying And SellingBuying and selling of properties can be a great way of making a lot of money from real estate. One way that you can make money is by buying a home that is undervalued then selling it at a higher price. Buying homes that have been foreclosed can also give you some good cash if you renovate the house well. Most foreclosed homes are usually sold way below market price, if you buy the homes you may get back double the money you put in. The only trick with foreclosed home is to buy them early before they are listed as foreclosed.2. Renting And LeasingMost people are using this strategy to make money from real estate. For you to rent houses you need to have management skills. You can buy a property or build one then you can rent the houses. You will then be collecting rent money from every tenant every month. This is a good way of making money. Leasing on the other hand is beneficial to those people who can’t afford mortgages. You can lease a property, and have the option of getting the property for less money when the time is right.3. Becoming A Real Estate AgentIf you don’t have the money to buy a property, you can still make some good money from being a broker. The real estate agents get their money from the commission they get from the homes that they sell. The only requirement with becoming a broker is you need to have a license of operation. As a real estate agent, you can also earn money from being a consultant. With this business you will be giving people advice on properties and earning good money from that.4. Buying LandAs you know land appreciates over time. So if you buy land and sell it at a certain period of time, you will get a huge sum of money from that. You will however have to consider the location of the land and the market situation before you sell the landTips For Making Money From Real EstateResearch And Evaluate Your CashReal estate can be a great way of making money but it can also cost you a lot of money and time if you don’t know what you are doing. It is thus important to conduct a market research of the available properties before buying them. Observe the market situation so that you can know the amount of money you will be required to part with if you decide to invest in property. You will also have to evaluate the amount of cash you have before you can buy a property. By knowing how much money you have and how much you are willing to part with will help you in knowing the kind of property that suits you. You will also be required to know your target market before investing. This will help you know how to remodel the property to be suited for the right market.Buy Cheaper Homes And Consider The Add Up CostsIf you want to make a lot of money from real estate, it is advisable that you buy cheaper homes. This way you will either sell or rent at a higher price that is also favorable. If you buy an expensive home you will be required to sell or rent the house at a price that is too high, a move that may chase away potential buyers. The fact that you are buying a cheaper house does not mean that you have to buy houses that are of poor quality. It is good to consider the quality of houses so that you can determine the amount of money that you will be required to use in repairs.Consider The Cost Of Entry And The Capital GrowthThere are certain countries that impose extra fees when it comes to buying of properties. It is therefore advisable for you to research about the country you want to purchase the property in. You will also be required to know the capital growth, and if there are any businesses or companies surrounding the property. A high valued property is one that is surrounded by social amenities. Considering the cost of exit will also determine the amount of money you get. The cost of exit usually refers to any tax money that is imposed on sold properties. There are countries that demand tax for any sold propertyGet Professional HelpConsult with the real estate professionals before investing in real estate. This will help you in making the right decisions. You may seek professional help in determining the quality of the property, and the current value of the property. You may also consult the professional to find out the period of time that you will have to wait to sell the property, and the amount of money that you expect to get from the property.