Although the concept of REITs has existed abroad for some time, it is relatively new in India, and as such has become a trending buzzword among real estate investors. The IPO of India’s first REIT was launched in the March of 2019 and as of yet, there’s still a considerable amount of unawareness amongst the masses regarding the REITs. Let’s get all your doubts and worries cleared with this informative blog!
REIT is the short form for Real Estate Investment Trust. REITs are companies that own or finance income-producing real estate across a range of property sectors. These real estate developers have to meet the criteria for a number of stringent parameters to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors.
If you are looking for investment opportunities in real estate from a second home perspective, you will have to invest in a residential or commercial property, so that you can generate income through rent or reap substantial rewards when the property appreciates. For this, you’ll have to start by searching for the right property which can be either be residential or commercial, depending on your need. After finalizing the property, you’ll have to start making the adequate financial arrangements for procuring the property, either through a loan or via direct payment. Additionally, the documentation and transfer of paperwork will require legal counsel. All of these factors create a lot of additional costs for you to bear for the investment itself, and the returns will start much later.
Now consider REITs on the other hand. REITs are less capital intensive as compared to direct in investment in real estate property for the abovementioned reasons, and are far more affordable. They are also suitable for small investors and individuals as they eliminate the need for dealing with builders and developers who may have more clout and influence. While the implementation of RERA act certainly improved conditions for buyers and made the sector more transparent, REITs can be a safer alternative for investors who are looking for peace of mind. Returns are much easier with assured dividends from REITs. One of the biggest advantages of investing in REITs is that the dividends earned are tax free!
REIT is also regulated by a regulator which will further eliminate the chances of any bungling commonly done by substandard-builders. Investment in real estate market through REITs will give the accessibility to common man to invest in properties developed by top notch developers & builders. If you are looking to invest in a property and stay in it as well, you can still add the edge of REITs to achieve your future planning goals better.
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