Do you desire to invest in real estate that you wouldn’t have to manage yourself?
Manage in terms of buying and financing the properties.
Are you one who can patiently wait until your investment yields profitable ROI in the long term?
If yes, then keep reading on…
Yes! A real estate investment trust is indeed a good career path, provided you’re inclined to things relating to finance and real estate.
In this article, you’ll get to know what real estate investment trust is all about and what you need to look out for!
Let’s look into what a real estate investment trust is.
What Is A Real Estate Investment Trust?
A real Estate Investment Trust (REIT) is a business organization that operates, owns, and finances real estate properties that generate income.
Investors can earn revenues— through the pooling of the capital of various investors—without having to finance, manage or purchase real estate investment properties.
With REITs, you don’t have to invest a huge amount of money that is normally required to be invested directly into real estate, like a mortgage. This is because REITs hold real estate properties rather than owning physical real estate.
Any business organization that wants to become a Real Estate Investment Trust (REIT) must satisfy the following five (5) prerequisites, viz:
- Be an establishment that can be taxed as a company.
- Invest a minimum of 75% of total properties in real estate.
- Not possessing more than 50% of shares held by a maximum number of 5 people.
- Pay in the form of shareholders’ dividends a taxable income of no less than 90% every year.
- Maintain no less than 100 shareholders after a year of existing.
Types of Real Estate Investment Trusts (REITs) In Nigeria?
Three (3) types of Real Estate Investment Trusts (REITs) exist, namely:
- Equity REITs.
- Mortgage REITs.
- Hybrid REITs.
Let’s go over them below in detail.
Equity REITs
These are real estate business organizations or companies that create, own, and manage properties.
These properties include; apartments, malls, shopping malls, office buildings, and warehouses. They generate income from leasing these properties to tenants.
Mortgage REITs
These are real estate business organizations or companies that give loans to real estate owners through mortgages or the accession of a mortgage pass-through.
Also read: What does contingent mean in Real estate?
When interest rates increase, stock prices are lowered thereby leading to a decrease in mortgage REITs’ Stakeholder’ Equity.
Hybrid REITs
These are real estate business organizations or companies that make use of both Equity and Mortgage investment operations.
They create, finance, manage, own, and operate real estate properties.
Real Estate Investments Trusts (Reits) In Nigeria
They are:
- UPDC Real Estate Investment Trust.
- Union Homes Investment Trust.
- Skye Shelter Fund.
UPDC Real Estate Investment Trust
UPDC REIT is an equity REIT in Nigeria, founded in 2013.
This Real Estate Investment Trust company in Nigeria is considered one of Nigeria’s largest REITs by book value.
It has a diversified portfolio in Lagos and Abuja of real estate assets.
Unitholders are provided with a cash flow distribution— 90% of their taxable income is distributed as dividends.
Unitholders stand to gain the following benefit:
- Liquidity.
- Transparency.
- Long-term Capital Profit, but to mention a few.
Investors willing to invest in real estate without the desire for direct ownership can invest in UPDC REIT.
To invest in UPDC REIT, you can, with the help of stockbrokers, buy a unit share.
To know more about how to invest in this trust, kindly email them at [email protected].
Union Homes Investment Trust
Union Homes Investment Trust is a hybrid REIT in Nigeria, founded in 1994.
This Real Estate Investment Trust Company in Nigeria is one of the top financial institutions for mortgages.
They help investors in the housing system buy estates and houses for exchange to commercial and private clients in Nigeria and Abroad.
If you’re interested in getting a mortgage through this REIT, you can apply online on their website, union homes where you get to choose:
- The type of loan you want— purchase, rate, or equity.
- The loan program.
- Your property value.
- Loan amount.
On their website, you can get information about all you need to know regarding Union Homes REIT.
Skye Shelter Fund
This real estate investment trust (REIT) changed its name to SFS REITs on January 31st, 2020 following its enactment by the Nigerian Stock Exchange where its symbol was changed too.
This real estate investment trust (REIT) company operates by investing in revenue-generating real estate through pooled funds.
75% of the investment of SFS REITs goes into real estate while the remaining 25% goes into related real estate investments like mortgages.
This REIT makes investments that offer diversification— the reduction of overall portfolio risk— and opportunities for extra return in alliance with reliable developers.
If you want to know how to invest in SFS REITs, check out their website SFS REITs.
Best Paying Jobs In Real Estate Investment Trusts?
In this section, we’ll take a look at five (5) best-paying jobs in real estate investment trusts seeing that it’s a lucrative industry to venture into.
They are:
- Real Estate Agent.
- Real Estate Developer.
- Real Estate Investor.
- Real Estate Property Appraiser.
- Property Manager.
Real Estate Agent
A real estate agent working for REITs connects potential buyers and sellers to either sell or purchase a property— residential or commercial. One who wants to opt-in as a REIT real estate agent must have a bachelor’s degree in statistics or finance.
According to the U.S Bureau of Labor Statistics, real estate agents earn around $48, 770 per year.
Real Estate Developer
Just like the name implies, Real Estate Developers are responsible for developing lands to later sell them.
The decision of the building and design of the property is made by them. Anyone with an interest in this field and a background in real estate can become a real estate developer.
To make it work, one has to be ready to source the funding for the property — its development, design, etc. Economic factors e.g interest rates affect the success of this job. To succeed, you must possess multitasking and strong communication skills.
A Real Estate Developer’s annual salary is $103, 616.
Real Estate Investor
A Real Estate Investor buys either residential or commercial real estate properties and sells them at a favorable rate after adding value to them. One who wants to become a Real Estate Investor must be:
- someone willing to take risks,
- Have funds to invest in real estate assets.
- Someone who knows how to conduct market research.
- Someone who knows how the real estate market works, and when to buy and sell properties.
According to Ziprecruiter, as of November 2022, the annual salary of a REIT investor is $119, 731.
Real Estate Property Appraiser
Real Estate Property Appraisers provide appraisal services i.e they determine the value of properties after inspection of the property whether residential or commercial property.
A bachelor’s degree in real estate courses and economics is required.
Their annual salary according to the US bureau of labor statistics is $61, 340.
Property Manager
Property Managers are responsible for looking after properties whether they be residential or commercial properties.
People who are good organizers, and possess excellent communication and leadership skills can work as property managers.
According to the U.S bureau of labor statistics, the annual salary of property managers is estimated to be around $59, 230.
Conclusion
Having gone through this article, you must have found the answer to your question— Is real estate investment trust a good career path?
It’s time to go and implement what you’ve read!