AMA Q&A Part #3 - Why REITs?

 

Question on why I focused on REITs.

I am reposting a sticky post from my blog on why REITs. I have however diversified into overseas REITs of different industry, not just local retail REITs.

I started buying my first REITs about 10 years ago because I heard so much about the wonders of passive income. Just park your money there and you get 6-7% back every year.

I didnt do much research but instead bought a few books to read on REITs and properties ( By Ku Swee Yong, in fact i have all his published books). With that, i was on my way. The first few REITs purchased were retail REITs that have shopping centres familiar to me. CMT, Suntec, MCT and Starhill Global.

REITs do have tangible assets, just that you cannot sleep in them(my reply to another fellow blogger's post), but you can shop in them! To me, the number 1 rule of investment is to buy what you understand, thus retail REITs are easy to understand. You go to the shopping centres, have a look to see hows the shopper traffic, is there a big crowd constantly? Look at the tenant mix, is it something that appeal to the crowd? Does it have events and activities to attract crowds? It's not rocket science.

I always like properties but I didnt have much capital to start property investing 10 years ago, that's also 1 of the reasons why i went with REITs. Initial capital outlay of REITs is very small compared to buying a property.