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Retirement Planning with Grant Hicks
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 Grant
Hicks, C.I.M., FCSI is a professional speaker, co-author and
a Retirement Planning Specialist A leader in
the financial industry, Grant has been helping Vancouver
Island residents plan and create their retirement lifestyles
since 1989. |
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Investing In Real Estate
With stock markets concerning
investors today, some people are looking at
investing in real estate.
The real estate market in British
Columbia has seen some positive numbers lately and
have people on Vancouver Island wondering if this is
a good time to invest in real estate.
The challenge is that once you invest
in the real estate, deciding to sell doesn’t provide
you with instant liquidity. An alternative is Real
Estate Income Trusts or REITS and mutual funds or
portfolios that invest into REITS. Real Estate
Investment Trusts (REITs) are an efficient way for
many people to invest in commercial and residential
real estate companies.
As an investment, REITs combine the
best features of real estate and stocks, giving
investors a practical and effective means to include
professionally managed real estate in a diversified
investment portfolio. REITs qualify as pass-through
entities, companies who are able to distribute the
majority of income cash flows to investors without
taxation at the corporate level (providing that
certain conditions are met).
As pass-through entities, whose main
function is to pass profits on to investors, a
REIT's business activities are generally restricted
to generation of property rental income.
Another major advantage of REIT
investment is its liquidity (ease of liquidation of
assets into cash), as compared to traditional
private real estate ownership which are not very
easy to liquidate.
One reason for the liquid nature of
REIT investments is that its shares are primarily
traded on major exchanges, making it easier to buy
and sell REIT assets/shares than to buy and sell
properties in private markets.
An interesting thing about REITs is
that they are probably one of the best inflation
hedges around. Several high quality Canadian REIT’s
have higher yields than GIC’s and are more tax
efficient. Funds that hold REIT’s are designed for
investors to receive monthly or quarterly income.
If you invest in them, pick a mutual
fund that invests in REIT’s instead of just one.
However, they tend to be a conservative investment.
This is because rental revenues do not usually vary
as much as revenues at a manufacturing or service
firm.
If you are looking to invest in real
estate, learning more about REIT’s may help you
become a better investor.
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