REITS for the small guy

cloonton

So if you were a Guard*, who had a yearning to buy a little investment property but had decided that these REIT yokes sounds like a good way of spreading your risk, where would you go?
What I'm asking is, is there a REIT set up yet for the small investor to put in €10, €30 or €70k (or the like)? I did a bit of googling on this when the first Irish REIT started trading on the stock exchange, but to be honest it seems to be aimed at fellas bigger than me. Does anyone who if there's been one set up for the small guy, or if there's a reason that'll never happen, perhaps?



*I'm not, btw, just picking the typical example...

Henry Ford III

Standard Life have had a Global Reit fund available for years. €10000 or €175p/m.

cloonton

Henry Ford III wrote: »

Standard Life have had a Global Reit fund available for years. €10000 or €175p/m.

Thanks, I didn't know that - it's good to know. Call me patriotic, or foolish, but I'd like to put my money into an Irish one for some reason. Must be the Guard mentality??

_Kaiser_

cloonton wrote: »

Thanks, I didn't know that - it's good to know. Call me patriotic, or foolish, but I'd like to put my money into an Irish one for some reason. Must be the Guard mentality??

Personally if it was me I'd be putting it wherever I felt it was safest/offered the best return, and to be honest given the farcical banking system we have in this country (Anglo tapes anyone?) I'd feel a lot safer with it being out of Irish hands entirely.

But that's just me..

Henry Ford III

cloonton wrote: »

Thanks, I didn't know that - it's good to know. Call me patriotic, or foolish, but I'd like to put my money into an Irish one for some reason. Must be the Guard mentality??

To me at least investing in an Irish REIT would be a brave call.

StillWaters

Henry Ford III wrote: »

To me at least investing in an Irish REIT would be a brave call.

Certainly not for the faint hearted.

murphaph

I disagree to an extent. I think it's a real shame REITs weren't around years ago to lure people away from buying and managing individual units with all the stress they can entail. The risk to a small time landlord with one or two units in Ireland is MUCH higher than if he invested the same sum in an Irish REIT. One bad tenant will wipe out his profit and maybe much worse. You will NEVER get back lost rent/damage from a rent nomad (German expression that I think accurately describes these people) so it could take years to be back breaking even.

With a REIT you are spreading the risk much wider. You are on board with many others so instead of owning 1 unit with that high risk, you own a little bit of perhaps 500 units, with a much lower overall risk of rent default. The REIT does all the dirty work of managing the properties. You'll get a lower return than investing in a unit yourself but the risks are MUCH lower for the individual investor.

I would be much more comfortable putting 50k into a REIT than into a single apartment. If we had had REITs all along we might also have had a more corporate rental sector as evidenced in other countries. In Ireland I don't know of any large landlords that own entire blocks, which is common here in Germany at least. such landlords operate at a certain economy of scale, with their own repair men etc. and can keep costs per unit low because of that.

gaius c

murphaph wrote: »

I disagree to an extent. I think it's a real shame REITs weren't around years ago to lure people away from buying and managing individual units with all the stress they can entail. The risk to a small time landlord with one or two units in Ireland is MUCH higher than if he invested the same sum in an Irish REIT. One bad tenant will wipe out his profit and maybe much worse. You will NEVER get back lost rent/damage from a rent nomad (German expression that I think accurately describes these people) so it could take years to be back breaking even.

With a REIT you are spreading the risk much wider. You are on board with many others so instead of owning 1 unit with that high risk, you own a little bit of perhaps 500 units, with a much lower overall risk of rent default. The REIT does all the dirty work of managing the properties. You'll get a lower return than investing in a unit yourself but the risks are MUCH lower for the individual investor.

I would be much more comfortable putting 50k into a REIT than into a single apartment. If we had had REITs all along we might also have had a more corporate rental sector as evidenced in other countries. In Ireland I don't know of any large landlords that own entire blocks, which is common here in Germany at least. such landlords operate at a certain economy of scale, with their own repair men etc. and can keep costs per unit low because of that.

Okay so you've put all your eggs in multiple baskets and then lashed them together with a big strap clearly marked "property investment".
Seriously, people thinking about investment really need to broaden their horizons.

cloonton

Yeah.
In fairness, there's already plenty of threads dealing with the future of the housing market and the economy in general. I think anyone considering taking a punt on the market is probably well able to read them. The question is if anyone knows of a REIT for a small investor in Ireland?
Silence is an valid answer too, you know. If someone wants to start another thread on the pros and cons of REITs in Ireland, I'll gladly lurk

murphaph

gaius c wrote: »

Okay so you've put all your eggs in multiple baskets and then lashed them together with a big strap clearly marked "property investment".
Seriously, people thinking about investment really need to broaden their horizons.

Who (apart from you) said I would put ALL my money into a REIT?

No investment portfolio should be without diversity.

yoloc

what does REIT stand for

StillWaters

yoloc wrote: »

what does REIT stand for

Real Estate Investment Trust. Introduced in the last budget.

http://www.algoodbody.ie/insightspublications/REITs_They_Have_Arrived

sunnysoutheast

yoloc wrote: »

what does REIT stand for

Real Estate Investment Trust

Probably worth mentioning that the underlying property assets are relatively illiquid, many funds applied capital withdrawal restrictions when these things went bad in the UK in a previous downturn. Seem to be becoming popular again in the UK but in the commercial letting space.

Given the returns on offer with equities at present, I don't think I'd be tempted.

gaius c

murphaph wrote: »

Who (apart from you) said I would put ALL my money into a REIT?

No investment portfolio should be without diversity.

cloonton who made the thread wants to put money into "these REIT yokes sounds like a good way of spreading your risk" and then followed it up with "I'd like to put my money into an Irish one for some reason". My point being that you're not spreading the risk. At all. All your in that fund would be in property and more to the point, Irish property.

The only way you "spread the risk wider" is that the amount invested might be smaller and there's loads of other small guys in the same boat with you.

murphaph

gaius c wrote: »

cloonton who made the thread wants to put money into "these REIT yokes sounds like a good way of spreading your risk" and then followed it up with "I'd like to put my money into an Irish one for some reason". My point being that you're not spreading the risk. At all. All your in that fund would be in property and more to the point, Irish property.

The only way you "spread the risk wider" is that the amount invested might be smaller and there's loads of other small guys in the same boat with you.

So you accept that I never suggested investing all your money into a REIT (or property in general)? Good, glad we cleared that up.

Irish (in particular markets) property is actually performing well right now by the way. Yields are pretty decent, but the risks remain high (especially for small time landlords) as the laws are stacked up on the side of the delinquent tenant. Investing in property through a REIT mitigates against this risk however.

The bit in bold highlights that you don't really understand the risks of being a small time landlord looking for a steady yield (not investing and hoping against hope for capital appreciation). The main risk is a delinquent tenant, who can wipe out your profit for years. This risk is spread among all the REIT investors so a single investor will not "lose everything" but rather lots of investors will "lose a tiny bit".

gaius c

Very defensive there Murph.
While the REIT investor might be protected from the singlular catastrophic risk that a small time landlord is prone to, they will be exposed to higher frequency of them (albeit smaller) and this will reduce the overall yield.

At the end of the day, the OP is talking about putting money into an investment class which is solely "Irish property". They are entitled to hear dissenting views.

murphaph

gaius c wrote: »

Very defensive there Murph.
While the REIT investor might be protected from the singlular catastrophic risk that a small time landlord is prone to, they will be exposed to higher frequency of them (albeit smaller) and this will reduce the overall yield.

At the end of the day, the OP is talking about putting money into an investment class which is solely "Irish property". They are entitled to hear dissenting views.

Not defensive at all and I already stated that the yields would be lower because the risk is lower.

He is considering investing into an Irish REIT, so of course it invests in Irish property.