Property investment trusts

Property Investment Trusts

Property Investment Trusts

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Property investment is a brilliant way of adding an extra flow of income to your bank account. Property investment is one of the most popular types of investment due to its safe returns and not being too stressful to perform.

With other types of investment, such as stocks or shares, it’s very complicated to learn on your own. It can also be pretty stressful as you have to check the markets regularly. You’ll also be a lot more likely to lose money if you’re not experienced- no one enjoys losing money!

Property investment can be a lot more laid back where you only have to buy the house and sell it or find tenants willing to rent the house.

However, property investment is far from easy. You need a lot of money saved up to buy houses to start. Very profitable properties are usually the most expensive. And, of course, you’re at risk of losing money as with any investment.

Property investment trusts make it easier for regular people to profit from valuable properties without large deposits. To use property investments, you must know how they work and the benefits they provide.

What are Property Investment Trusts?

Property Investment Trusts

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A property investment trust is also commonly called a real estate investment trust. It’s a large company that owns lots of properties and many different types of properties. 

So how can you benefit from this? 

Property investment trusts generate income from selling their property or rent payments for their properties. Property investment trusts allow you to take a share of some of their profits by either buying company stock or using a mutual fund.

Trusts mainly use the money you use to pay for the stock to buy more houses and pay for other costs associated with houses.

Property investment trusts payout at least 90% of their income to shareholders. When you buy stocks of the company, you become a shareholder, so you’re entitled to a share of their profits. Your return on your share depends on the value of stocks you bought- if you buy more stocks, you receive more money.

Benefits of using Property Investment Trusts

Using property investment funds have a range of financial and time benefits.

1. High returns

Property investment trusts are required to give at least 90% of their taxable income back to shareholders. This process leads to high dividend yields and returns on your investment.

High dividend yields are excellent because you get a pretty significant return without buying a costly amount of stock.

Also, houses are nearly always increasing in value naturally. Investment trusts also use strategies to increase the house’s value, such as renovating or converting properties.

This increase in value increases your returns, meaning most investment trust funds result in very high total returns.

2. Less Maintenance

When buying property for traditional property investment, lots of extra costs come with the houses. You also have to spend a lot of time visiting the house and checking if everything is in order.

Maintenance costs can rack up, especially if you do not have a tenant in the house. If there’s no rent money coming in, mortgage repayments and all other costs come from you only.

By investing using investment trusts, you can skip all of this hassle! The company takes care of all the managing of houses and extra costs which means you don’t have to worry. 

3. Ownership of high-profit Properties

Property investment trusts were created to give everyday people access to investing in commercial properties.

For most investors, buying a shopping centre or an office tower would be impossible as they don’t have enough funds for the initial deposits. These types of properties have much greater returns and rent values as well.

Property investment trusts allow you to own small parts of these buildings and receive a reliable profit from them.

Property Investment Trusts

Source: Unsplash

In short, using property investment trusts provides many benefits and a safer way of receiving profit from properties. There are still benefits from traditional property investment. You would still likely receive more profit if you own a house and rent it yourself unless you have a lot of stock in an investment trust.

But suppose you don’t feel ready to take the risk of buying your own house. In that case, property investment funds are great alternatives that can still secure you a tasty profit!

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