The most typical form of property investment is direct ownership. This is when you take out a home loan to buy a house and then rent it out. When the loan is settled, you will get the house title. 

You get a bunch of benefits when you directly own property. One is you have direct control over the property you are renting out. You call the shots. Another is access to the equity which you can access to fuel other property investments. And after years of holding a priority, your house will appreciate in value. 

However, it takes a lot of time and energy to maintain directly owned properties. You will deal with tenants and management issues.

For the sake of evading such problems or diversifying your property portfolio, you can consider investing in real estate indirectly. Read on to find out how. 

What are A-REITs?

REIT stands for Real Estate Investment Trust. A-REIT is simply what it is called in Australia. It’s like a mutual fund. You buy stocks under a company that manages multiple income-generating real estate properties. You earn just like how you would in regular stocks, through dividends and appreciation of shares. 

It is one of the easiest gateways to indirect property investing. The company manages multiple properties and rents them out. The profit made out of these properties is shared among investors called unitholders.

This is more passive than direct ownership. You give them your money and you wait for your share of the profit.

Types of REITs

You can own different kinds of properties when you invest. The same properties are found under REITs. One is retail which includes shopping complexes and shops. Comercial is another type which includes farmlands and office buildings.  Another is residential which includes house and apartment complexes. Then industrial REITs hold distributions centers, factories, and production plants. 

What are the benefits of investing in A-REITs? 

No big money required

If you want to own a property as your first investment, you need to have a 20% deposit to be able to get a loan. You can have an amount lower than that but you will have to pay a lender’s mortgage insurance. 

With A-REITs, you can start investing with just a few hundred dollars. Plus, you don’t have to pay a monthly mortgage. 

A great intro to property investing

If you want to try your hand at property investing but you don’t want to deal with the complexities just yet, A-REITs could be a great intro. Just like any other investment, you have to research the industry first. 

By knowing how big property portfolios work, you get a glimpse into a rather complicated industry. You also have to watch the movement of the property market. When you invest in A-REITs, timing is of paramount importance, too. Just like how it is with direct investing. 

You have to watch the news. Some events are good indicators of whether the housing market will move in your favor or not. 

Starting with A-REITs is a good strategy if you want to get the know-how of the industry. You will be more well-informed by the time you try your luck in the field directly. 

If you need help on taking out property investment loans, our brokers are always open to help.