Everything you need to know about buying or investing in real estate

(Conclusion)

A good majority of Filipinos eREITmbraced digital transformation by choice, and largely, by consequence because of the pandemic.

Social distancing, lockdowns and all sorts of restrictions forced many of us to acquaint ourselves with mobile banking, online investing, digital currencies and e-wallets. These services, however, are seen to stay even as we’re now slowly going back to our pre-pandemic lives, simply because of their ease, convenience and reach.

For instance, it’s more practical to pay fund transfer fees than spend on transportation (fuel, parking, among others) and waste time doing bank errands, because you can do it in the comfort of your own home. It’s also more convenient to invest online than show up physically, sign paper forms and manually submit your transactions—again, because you can do these online during your office coffee break.

But how about real estate investing?

Top developers have found a way to bring showrooms and model units closer to potential buyers, whether they are here in the Philippines or overseas. But that’s just the tip of the iceberg.

In 2020, the Philippine investment scene introduced the newest kid on the block. After a decade of waiting, Republic Act No. 9856 or the Real Estate Investment Trust (REIT) Act of 2009 was finally enacted.

Real estate, bond market and stock market Investing in one

REIT investing will also allow investors to take advantage of the expertise of professionals because they will have fund and property managers working for them. (wealthprofessional.ca)

This essentially gave us a brand new investment asset class with the income-generating feature of real estate, dividend-paying feature of bonds, and the tradability feature of stocks all in one investment vehicle.

We may have entered the REITs scene late compared to developed countries like the United States, and a number of our Asian neighbors like Hong Kong, Singapore and Japan. But the good thing is, the future is here.

Real estate investing for everyone

REITs essentially give us the opportunity to co-own income-generating real estate assets of registered REIT companies.

Instead of having to buy, acquire and own expensive real estate assets for us to make money off of them, REITs offer a much more affordable workaround because we are given the option to purchase shares of the REIT company through the stock market.

All you need to have is an account with an accredited online stock brokerage firm, which will be your portal to buying and investing in REITs here in the Philippines.

REITs essentially give us the opportunity to co-own income-generating real estate assets of registered REIT companies. (bankrate.com)

Without breaking the bank

REIT investing is affordable because you don’t have to purchase multimillion-peso properties. You won’t need to tap the loans market. You just need to buy shares of the REIT company in the stock exchange.

Delegation and diversification

REIT investing will not only diversify your real estate properties by giving you ownership to all properties of the REIT you are buying, but it will also take away the administrative and financial burdens such as repairs, maintenance, insurance coverage, real property taxes, renovation, remodeling and even estate or donor’s taxes.

REIT investing will also allow investors to take advantage of the expertise of professionals because they will have fund managers, admin managers and property managers working for them.

Where property investing meets liquidity

REITs are also liquid. It’s easy for you to buy online, and easier for you to sell should you need to convert your investments in cash. You don’t have to sell a chunk of the property, auction off an art piece in the office building or put up office furniture for bidding to get a portion of your investments. You just need to sell your REIT shares the same way you sell your shares of stocks and withdraw the proceeds of the sale for it to be credited to your bank account.

Two income sources

REIT investing will only require you an initial investment amount somewhere between P3,000 and P5,000. (getty images)

You no longer have to spend a fortune to build your apartment complex, worry about getting tenants, remind them about their monthly rent or think about the regular upkeep of your units. You can throw these worries out the window without compromising the earning potential of your money.

REIT investing will also give you the potential to earn from two sources. You can earn from price appreciation, and my personal favorite, from guaranteed dividends. REIT companies are required by law to distribute at least 90 percent of their earnings to us, investors, by way of dividends. And it’s something we receive every quarter.

Easy on the pocket

Lastly, REIT investing will only require you an initial investment amount somewhere between P3,000 and P5,000.

As you can see, REIT investing allows us to get a piece of the real estate investing pie without having to break the bank. This is an investment outlet most Filipinos should consider because it’s legitimate, affordable, convenient and something we all can avail of online.

There are currently a number of REITs in the country (see chart). But if your online broker is big and good enough, it may even provide you access to Asia Pacific and global REITs by way of their mutual fund or UITF partners.

REITs break barriers literally and figuratively as it allows us to invest with minimal need to travel and inspect the property we are buying because they are from well-established and trusted developers. It also allows you and me to make money by investing in real money-making assets both here and abroad without breaking the bank.

The future of real estate investing is here. And it is made borderless thanks to REITs!

The author, MBA, CIS, CSR, CTP, CUSP and CFMP, has 17 years of experience as a stock broker and public speaker. He heads both the Business Development and Market Education Teams of First Metro Securities Brokerage Corp. and sits in Metrobank’s Financial Education Editorial Advisory Board