What to consider when investing in REIT?

Like with all investments, there are a number of things that you should lookout for to ensure your money is put in the right places.  Here are a few things to consider when it comes to REIT:

1. Dividend payout

As an investor it is imperative that you invest your money in a REIT that has an increasing dividend payout. With ever rising cost of living and inflation, your investment should preferably yield a dividend of between 6% and 8%.

2. Growth

The company managing the real estate assets must be actively acquiring and improving on their assets. Growth in this regard will contribute to growth in dividend payouts.

3. Diverse portfolio

Ideally, the real estate assets held and operated by the managing company should include properties across several industries (e.g. industrial, commercial, residential and healthcare).

The reason behind diversifying is so that rent from one class of property that is performing well can make up for a different class of property that is not yielding as much rent income.

4. Gearing

As operation cost rises, many companies are finding their bottom line affected pushing them to take up debt to fund growth. When a company takes on too much debt, they are regarded as being highly geared, which may cast doubt on their ability to perform.