One of the most popular ways of taking advantage of the growth in the real estate market is to invest in a pool of real estate stocks. As the saying goes, there is no easy money in this world, you must make effort to make money. In real estate investments too, it is possible to make money via smart tools and instruments.
Invest in Real Estate Investment Trusts (REITs)
Although a newer phenomenon in the Indian subcontinent, REITs are in the market for a long time now. As a smart investor, you can invest in these REITs with a small amount and can earn from the rental income generated by the managing bodies. Each investor gets a return based on his/her investment.
Nakul Mathur, MD, Avanta India said that although a newer phenomenon in the Indian subcontinent, REITs are in the market for a long time now. For the uninitiated, a REIT is usually a large company which owns and manages large income-generating real estate. These real estate properties can be hospitals, warehouses, large office spaces, shopping malls, hotels and commercial properties of different kinds.
Moreover, REITs can be traded on the stock market like every other equity share of the company. The REIT provide the benefit of faster liquidation than traditional properties.
Infrastructure Investment Trusts (INVITs)
Very similar to REITs, retail investors can also invest in Infrastructure Investment Trusts or INVITs. Infrastructure Investment Trusts are large companies which own and manage operational infrastructure projects and earn from the income generated from these assets, said Virender Kumar, Head - Business Strategy & Marketing, ARETE Group. In simple words, INVITS are pooled investment vehicles like Mutual funds. They invest the sum accrued into highway projects, power plants, airports, transmission lines and large scale pipeline projects etc. In addition to this, INVITs are designed and managed in such a way that 80 per cent of the investors’ money is invested in revenue-generating and completed projects. This mitigates the risk associated with under-construction projects.
One of the most popular ways of taking advantage of the growth in the real estate market is to invest in a pool of real estate stocks. Although the direct investment in stock poses a high risk, a growing market also presents an opportunity to earn a handsome return in long term.
“If you are wary of investing in the stocks directly, you can choose a thematic mutual fund which focuses on the real estate market. Here, a pool of top real estate companies will be targeted and your money will be exposed to the real estate market. The Mutual fund way of investment also minimizes the risk as the differential performance of various players normalizes the returns," said Atul Goel, MD, Goel Ganga Group.
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