Subscribe to this blogReal Estate Headlines from Christchurch, New Zealand that May Sound Familiar
“Housing is becoming unaffordable for the average worker.”
“First time homebuyers send out an SOS.”
“A quarter of young house-hunters are being derailed by too much personal debt.”
“If the current rise in home prices continue, many New Zealanders may never be able to purchase a home and will be life-long renters.”
Do these statements sound familiar? These quotes were seen in many U.S. papers less then 2 years ago. I can’t help thinking that this is déjà vu.
Today’s paper however opened my eyes.
The headline “Government eyes a share market solution as home prices soar” drew my attention.
The government is investigating whether corporate or institutional involvement in rental property could help meet housing needs. Real Estate Investment Trusts (REIT’s) could provide affordable long-term rental housing needs through investor dollars and be a potential solution to help the country cope with the growing demand.
If you’re wondering why I would be interested in this article, first, let’s examine how REIT’s work.
Investors buy shares or units in a REIT. The REIT owns the houses/apartments and rents them out. The fund (REIT) would collect rent from the tenants and distribute its rental income to shareholders as dividends, after deducting expenses for managing and maintaining the properties.
Prices of these shares fluctuate based on current market conditions.
In the U.S., REITs have been a popular investment. They have been unheard in New Zealand. So why am I interested? After being here, I can see where real estate would make a good investment, but I am not interested in managing or maintaining a property for rental from so far away. BUT…. if I can buy into a fund that is just starting up and get in on the ground floor, I think my long term investment could potentially be a winner.