Investing in REITs.
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The document discusses passive income strategies focusing on Real Estate Investment Trusts (REITs), which allow investors to gain exposure to real estate without needing a large down payment. It compares the benefits of investing in REITs versus owning rental properties, emphasizing lower tax rates on REIT distributions and access to professionally managed properties. Additionally, it highlights factors to consider when selecting REITs and mentions an upcoming REIT investing course offered by PPIS.
Investing in REITs.
- 1. Passive Income Strategies for your Financial Freedom INVESTING IN REITs www.slideshare.net/ppis/
- 2. Disclaimer This is a presentation prepared for Education purposes only. Neither Prosperis Passive Income Strategies (PPIS) nor any of its personnel are registered broker-dealers or investment advisors. We may mention that we consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because we consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that we are telling you to trade these exact strategies or securities. Keep in mind that we are not providing you with any specific recommendations or personalized advice about your own trading activities. The information we are providing is not tailored to any particular individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security, or a suggestion that it is suitable for any specific person. Keep in mind that all trading ALWAYS involves a risk of loss, even if we are discussing strategies that are intended to limit risk. Also PPIS personnel are not subject to trading restrictions. Myself and any others at PPIS could have a position in a security or initiate a position in a security at any time.
- 3. Real Estate as an Investment • People like that real estate is a real asset. • Generates a very predictable cash flow • Rents tend to go up at about the same level as inflation • Value of the real estate usually goes up over time • Expenses are usually pretty predictable
- 4. What are Real Estate Investment Trusts? A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges like a stock. Funds raised by a REIT are used to buy a pool of properties which are then leased out to produce rental income that is later distributed to investors as dividends. REITs do not pay tax on the distributable income they pay to investors, but pay tax on the income they keep.
- 5. Why REIT over owning rental property The distributions from a REIT are taxed at a better rate than straight rent received from a rental property. Professional management at a great price because of economies of scale REITs give retail investors access to areas of the market they normally wouldn’t be able to participate in, like commercial or industrial property. A REIT may own hundreds of different properties spread across North America and even globally. No down payment needed. Minimum required is based on your brokerage.
- 6. Why owning rental property over REIT • Leverage: It’s possible for an investor to purchase a rental for as little as 5% down. That kind of debt can lead to a succulent return on the original invested capital if done right. • Control: As a property owner, you make decisions related to setting of prices, purchases and ongoing costs. You are more directly involved in decision- making. • REITs are traded on the stock market. If the value of the underlying REITs falls significantly, you may be selling at a loss.
- 7. Difference Between Investing and Trading An investor takes a long-term, passive approach. A trader takes a more active approach using various stock and options strategies that tend to capitalize on shorter-term market movement.
- 8. The Decision There are dozens of different REITs that trade on the TSX, and dozens more that trade on the U.S. markets. Which ones should you choose for your portfolio?
- 9. Factors to Consider • Distribution levels • Track record • Diversification (Geography and Sector) • Quality of assets • Management • Stock price fluctuation
- 10. Profile of a REIT • Trades on the TSX. Has fluctuated in price/unit from C$9.60 – C$11.80 in the last 5 years. • Owns 100 hotels totaling over 7,000 guest rooms in the United States. • It pays a monthly distribution $0.075 per unit, or $0.90 per unit annually, giving it an 8.4% yield annually. It has maintained this rate for 5 years.
- 11. Profile of another REIT • Trades on the TSX. Has fluctuated in price/share from $3.75 – $5.25 in the last 5 years. • Owns 307 retail properties in eight Canadian provinces totalling 7 million square feet of leasable area. • It pays a monthly distribution of $0.0208 per unit, or $0.25 per unit annually, giving its stock a 5.4% yield annually. It has raised its annual distribution for 12 consecutive years.
- 12. How to hold REITs (The PPIS way) In a self-directed account with an online brokerage Can be held in an RRSP, TFSA or Open Account.
- 13. $16.92
- 14. $16.92
- 15. How to invest in REITS – The PPIS REIT Investing Course • Two hours • Using the Questrade Trading Platform • When to Enter a trade, When to Exit a Trade • Basic Stock Chart Analysis How to identify trends (Moving Averages) How to define a trend (Fibonacci Retracement) Trend reversal predictions (Japanese Candlesticks) • Transferable skills to ETF and stock investing.
- 17. Course offered on November 8, 2016 • $100 BONUSES • Bring another person for half-price • Combine with November 22, 2016 at Special Rate • 10% off full price by registering TODAY $50 (2016 FRIENDS AND FAMILY RATE)