REITS - Real Estate Investment Trusts

Canada Reit Land Banking is on the rise today as an alternative investment medium with profits and principal to be returned to you after three to five years depending on when permission is given to develop the land. This article will give a quick introduction to the concept behind land banking and how it can fit as a part of your real estate investment portfolio.

Real estate can be a wise investment but beyond purchasing a home of your own, what is the best way to invest in real estate without getting your hands dirty and spending your spare time chasing tenants for rent A REIT or Real Estate Investment Trust may be the perfect investment vehicle. REITs own, and often operate, real estate but are publicly traded like stock. Profit is paid as dividend to stock owners.

Reit Investor Real estate investment horizons or in laymen terms, the time taken for you to recover the amount that you invested may take anything from a month if you flip properties to several years if you are talking about longer term investments. Land banking falls within the second category and qualifies as a longer term investment and returns however can be as much as four to five hundred percent of the initial sum that you invested into the property.

The authors of the report point out that US REITs (real estate investment trusts), on which the proposed PIF model is based, are primarily concerned with commercial property, and that REITs make up less than 1% of the US private rental sector. They suggest that, in the UK, 4% at most of the private rented sector. But they see PIFs as potentially serving particular niche areas such as affluent professionals, students, urban regeneration and new build, and affordable housing.

Real Estate Trusts What typically happens is that the developer bids for land that is not developed and then puts money to buy the land. Note in some jurisdictions there is usually some time lag of a few years before the city gives the go ahead for the developer to start building the development on the land. So the developer then sells the property to another company who then sells the property to investors who buy units.

Investors are showing a continued willingness to buy new commercial space, especially prime location, investment grade properties. Good returns are keeping investors interested. Overall, commercial property capital values grew 12.2% last year and 11.6% in 2004, due to rising foreign investor and pension fund demand. Further investment in the sector is expected in the run up to 6 April when the rules change for including commercial property in a Self Invested Personal Pensions (SIPPs). 2007 will see further interest with the advent of UK Real Estate Investment Trusts (REITS).

Reit Fund Three to five years later, the plots approval comes in and the developer then purchases the property from the investors at many times the price and then you can exit from your investment. Spend some time quizzing the land banking agent about what type of exit time frames is he looking at and find out the returns and compare it against the rest of the returns that you are looking in other types of real estate investments. Always balance the risk of loss and reward mentally so that you can make a rationale decision when faced with a high powered real estate investment sales pitch.

Similarly, estate investment trusts (Reit) later this year has not had a great impact on landlords investment intentions. Of those questioned, 73% say they intend to continue to invest in Buy to Let rather than diversifying into Reits. Of the remainder, 19% say they intend to invest in a mixture of the two and only 3% say they would invest in Reits instead of in Buy to Let.

Wells Real Estate Investment In conclusion, this is a long term investment with the unknown factor of when the land is given the green light to be developed further. Real estate investment thus may be slightly more risky than other types of real estate investment. That said, it is submitted that land banking can be used as a longer type form of real estate investment that you can add to your real estate portfolio.

Catalogue: Finance | Real Estate
Title: A Quick Introduction To Land Banking And How You Can Profit From It By: Joel Teo

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