Canadian REIT products have been regarded as "the greatest wealth builder" over the past decade. While stocks and bonds have experienced a wild ride, real estate - at least in Canada - has performed very well, and has avoided the volatility and fluctuations that are hallmarks of the market.
With Real Estate Investment Trusts, this stability is a result of pool of resources being invested in a diversity of properties. Investors form syndicates to reduce risk, and invest in no one property. A typical REIT will actually invest in a variety of commercial and industrial properties across Canada.
Besides investment diversity, REITs also benefit from sound and energetic managers who work to add value to the properties in order to generate more revenue. All rental properties are based on the fact that tenants pay monthly rents or leases; this is how the owner of the property generates income.
REIT property managers do all this and more - besides working to add services that increase the perceived value of the properties, they also seek to find the tenants who can the highest leases.
For an investor, the benefits are immediate. Profits based on leases are paid out in regular disbursements, which can either be claimed or can be returned to the investment pool to begin the cycle again on a bigger scale.
The asset manager, then, is an integral component to this sort of investment vehicle. He or she must have strategic vision, strong managerial skills, an entrepreneurial spirt, plus a strong sense of how to increase asset diversity in order to mitigate risk. They need to have an intimate understanding of the real estate market and what tenants want, and what tenants will pay for.
While it's difficult to assess the competence of these managers initially, a good place to start is to look at the REIT's "Declaration of Trust" document. This will explain the philosophy of the Trust, and will also outline key details such as criteria for acquiring or divulging of properties, and the maximum debt capacity of the syndicate.
With Real Estate Investment Trusts, this stability is a result of pool of resources being invested in a diversity of properties. Investors form syndicates to reduce risk, and invest in no one property. A typical REIT will actually invest in a variety of commercial and industrial properties across Canada.
Besides investment diversity, REITs also benefit from sound and energetic managers who work to add value to the properties in order to generate more revenue. All rental properties are based on the fact that tenants pay monthly rents or leases; this is how the owner of the property generates income.
REIT property managers do all this and more - besides working to add services that increase the perceived value of the properties, they also seek to find the tenants who can the highest leases.
For an investor, the benefits are immediate. Profits based on leases are paid out in regular disbursements, which can either be claimed or can be returned to the investment pool to begin the cycle again on a bigger scale.
The asset manager, then, is an integral component to this sort of investment vehicle. He or she must have strategic vision, strong managerial skills, an entrepreneurial spirt, plus a strong sense of how to increase asset diversity in order to mitigate risk. They need to have an intimate understanding of the real estate market and what tenants want, and what tenants will pay for.
While it's difficult to assess the competence of these managers initially, a good place to start is to look at the REIT's "Declaration of Trust" document. This will explain the philosophy of the Trust, and will also outline key details such as criteria for acquiring or divulging of properties, and the maximum debt capacity of the syndicate.
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