Mall of India, NoidaImage Credit source: Representative Photo
Now the trend of opening big and not small malls is increasing in the country. Be it Mall of India in Noida or Lulu Mall in Lucknow. But do you want that you also have a shop in such a mall and keep earning side income from it? This is now possible and that too with an investment of only Rs 15,000.
In fact, now through Real Estate Investment Trust (REIT) you can invest in commercial real estate projects in the country that generate rental income. What are REITs and how do they generate income? Here you will get complete information…
How do REITs work?
REITs are like a company that invests in or manages the operations of commercial real estate properties. These companies invest in projects like malls, commercial offices and earn rental income from them. REITs in India are allowed to invest only 10 percent of their total funds in under construction projects. REITs are not allowed to invest in residential projects.
How can the common man invest?
Actually there are 3 REITs in India which are listed in the stock market. They raise money from people like mutual funds, so that even small investors can invest in it. Till a few years ago, the minimum investment in it was Rs 50,000. Then its lot size was 200 units. Later SEBI made it a rule to invest from Rs 15,000. Now investors get one unit in the lot.
This is how your side income is
Whatever property REIT invests in, 80 percent of the property should be rent generating. As per the rules, REITs have to distribute 90 per cent of the income to its unit holders after deducting operational expenses from its rental income.
In this way, the investment made in REIT is in a way your hidden investment in commercial property (Proxy Investment). This is a good deal for people who cannot buy outright in a commercial property.
Embassy REIT, Brookfield REIT and Mindspace REIT are currently registered in the country. All of them are generating an average dividend yield of 5.5 per cent to 7.5 per cent.
