A REIT Management Company (RMC) identifies a project and raises public money through an Initial public offering (IPO). The RMC then buys a property (in the case of the Rental REIT Scheme) and rents it out. The rent is then distributed to the unitholders. Often generating larger returns, when run by experienced professionals, the group’s investments can be diversified well enough to manage risk and reduce volatility.
A real estate investment trust (REIT) is created when a corporation (or trust) is formed to use outside investors’ money to purchase, operate, and sell income-producing properties. REITs are bought and sold on major exchanges, just like stocks and exchange-traded funds (ETFs).
Investing in real estate can be lucrative but may be difficult when done alone. Real estate investment groups provide an opportunity to invest in real estate without solely bearing the commitment and being the source of funding.
