Ep.43: What Are REITs? How to Own Real Estate Revenue without Any Capital or Down Payment

By Sean Si

One of the things that a lot of people do is to invest in real estate. What’s your take on that given that you’ve been investing in REITs? REIT is a derivative, but it’s basically a stock. A derivative is a piece of paper that says you have exposure to something but do not own it. REIT gives you exposure to anything that has a possible rental income.  For less than PHP10,000 you can buy a stock of REIT. It brings you exposure to real estate without the need for a huge amount of money.  When you own a condominium, you have to find a seller before you can sell it. With REITs, you can choose to sell it whenever you want. When a condo you own doesn't have anyone renting it, then you won’t have any rental income. If you have a REIT of a hotel, even if 10% of it is vacant, you still get 90% worth of the possible income. Property prices right now are relatively higher than the rent that you would typically get. When the property that they will get is good and the rent they can ask for is high, then their yield would be worth it. When it comes to REITs, 90% of the operational income is given out as dividends so they can get something higher from REITs with a good rate for dividends then it would be even better. This led to Marvin investing in REITs in Singapore. He knows living spaces are highly valued in that country and he also says that the market is relatively easy to predict. He also invested in data centers because he believes that there will be a bigger need for data centers in the future-- with all the transition to digital that the world is currently undergoing.  Owning and managing a condo for rent is also quite the hassle, as told by Marvin. What is the Platform where people can invest in REITs? REIT is being talked about more in the Philippines because there was a disclosure that Ayala will have the first REIT in the Philippines. When they list it, it will be just like a normal stock. People still need to buy it from a stockholder.  Bear in mind that you can only buy stocks that have themselves listed to a specific stockbroker. You need to open specific accounts on specific brokers that have REITs. In the Philippine Market, specifically, there are no REITs yet.  Marvin’s investments to REITs in Singapore have already doubled after four years. Those investments also had dividends worth 10% which made them worth it. In this case, Marvin’s initial intentions were dividends. The appreciation and the increase in cash flow was just a bonus for him. Where did you open your Singaporean stocks? Marvin opened his account in Singapore. For other people, you can open up yours in 2 ways. First, they could fly to Singapore and open an account at any broker there. Or make a REITs account from etoro. That being said, Marvin doesn’t use etoro for his REITs. He only uses etoro to position in other stocks that he wouldn’t be able to buy in other brokers. The advantage of using etoro is for leverage and other stocks that he can get there. If people just want to get exposure, then etoro is the best platform to do so. If they want to make an account, then they have to fly to Singapore to do so. Marvin has been using etoro since last year. This CFD platform that is most known because of its copy trading feature. It’s a derivative that allows you to purchase different asset classes such as gold, bitcoin, forex, stocks, and funds.  He isn’t applicable for the copy trading part because Marvin doesn’t like the pressure of making trades that will make other people money. Support the show (https://tribe.leadershipstack.com/)

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