REITs are companies listed on the stock exchange that are dedicated exclusively to buying and managing properties to rent them out — shopping centres, offices, apartments, hospitals, logistics centres. By law, they are required to distribute between 80% and 90% of their profits as dividends to shareholders.
Advantages:
- You would earn money from rental income without dealing with notaries, mortgages, tenants, or repairs.
- Accessible with very little money — you could start with $55.
- Full liquidity — you could sell shares in seconds.
- Diversification — a single REIT can hold hundreds of properties across different countries.
- Regular and predictable dividends.
Disadvantages:
- Dividends are taxed the moment they arrive in your account — your tax authority would withhold the applicable percentage for your country immediately, with no option to defer.
- More volatile than physical real estate — the price rises and falls like any stock.
- Very sensitive to interest rate increases: these companies tend to carry a lot of debt, and when the cost of borrowing rises, their profitability falls.