Therefore, the rule of buying REIT is to buy those reputable REITs with market price less than their NAVs. This is because, even the trust is liquidated immediately, the fund will pay its unitholders based on their NAV but not the market price. Therefore, if you are able to buy REITs that are less than their NAV, you are actually buying properties at discount. As I highlighted in my previous post, Direct Real Estate Investment vs. REITs, you only need to sell REITs when market prices are higher than its NAV, or else, hold them for dividend cheques.
In average, REIT in Malaysia is giving yield between 6~12%. All information about market price, NAV, dividend yield can be obtained from daily news paper or your online share investment portal.
Happy investing.
Do you think that buying REITS is better than buying high dividend stocks?
ReplyDeleteFor me, stocks and REIT are different. I treat REIT as property investment. I also invest in stocks and my allocation to this category is much higher than REIT.
ReplyDeleteFrom my observation, as REIT is backed up by its properties value, its NAV is very stable. Also, as it is still less popular in Malaysia, its price also rather stable, even there was an financial crisis by Q4 2008. We can utilise REIT to offset volatility of stocks for the time being.
So can we make conclusion that buying REIT is as good as invest in properties?
ReplyDeleteIs there any REIT that you recommend now?
Well, it is totally depending on how you think. Based on the merits I highlighted, for me, yes, it is better.
ReplyDeleteI do not recommend any buy or sell on any particular stock or REIT as it is totally up to personal favorate. What I like might not be your preference. I suggest to do your homework and make you own decision. Your learn, you know. As there are not many REITs at Bursa, go to each REIT and study them based on critical success factors I highlighted in my post. You will find golds among them.
Good luck.
Hi there,
ReplyDeleteAs ypu said that ;
REIT Fund Managers report to Bursa its latest NAV on daily basis
Therefore, the rule of buying REIT is to buy those reputable REITs with market price less than their NAVs
My question what is the different NAV & market price. where can I get this info on daily basis.
Put it into a simple term, NAV is how much a REIT actually worth while market price of REIT is depending on market demand and supply. If a REIT is priced lower than its NAV, by buying the said REIT is the same as buying something at great sales.
ReplyDeleteYou can get daily info of REIT from daily newspaper and online share trading portal. I particularly prefer the latter because it can be assessed on real-time basis. If you need the database of REIT price movement, you may try BizStar or Yahoo Finance. These website consist of price tables as well as charts.
I guess that buying REIT is somehow is less demanding than buying a physical properties where you need to pay alot of duty, lawyer fees just to buy/sell property.
ReplyDeleteThus, REIT can be a good/easy way to indirectly participate in property price increases. Provided, you find a good REIT to invest :P