It is a universal aspiration to be able to make money even without being awake. That’s what passive income is all about: money that comes in regularly without you working for it every day
One of the best methods to get passive income in India is investing in REITs (Real Estate Investment Trusts). If real estate investment has always been on your mind, but you do not have a lot of money, then this might be a perfect choice for you. Let’s see what REITs are and how you can benefit from them as a source of passive income in India.
What Are REITs?
A REIT (Real Estate Investment Trust) is a corporation that legally owns and administers income-producing property.
These properties include,
- Corporate buildings
- Luxury shopping centres
- Places for lodging
- Storage units
- Residential units
By investing in a REIT, you do not get to own a property but rather get a small proportion of a well-diversified portfolio of real estate assets. REITs collect rent from these properties and share the earnings with investors. This is how you earn passive income from REITs.
How Do REITs Work?
A REIT can be compared with a swimming pool where individual investors combine their funds. Then, the REIT management invests the pooled money in commercial property and oversees it. The rent collected from those properties is then paid out to the investors as dividends, which typically occur on a quarterly or semiannual basis.
Instead of being the owner of a single flat or office space, you come to own a fraction of many properties scattered across the length and breadth of India, all of which are professionally managed.
Types of REITs in India
The classification of REITs is based on three criteria. They are,
Property REITs
They buy and hold the actual property, and their main source of revenue is rents.
Mortgage REITs
They provide financing for real estate purchases by buying mortgages, and they make their profit through mortgage interest payments.
Hybrid REITs
A mix of both, they invest in properties and also in property loans. Equity REITs are the most widely recognised and preferred type of REITs in India.
How to Invest in REITs in India
Investing in REITs is simple and doesn’t need a lot of money. To begin with, here are a few steps to follow,
Via Stock Exchanges
REITs are traded on the BSE and NSE like shares of the company. You can use your demat account to buy and sell REIT units.
Through Mutual Funds
Certain mutual funds involve themselves in the investment of REITs. You can be a part of those funds as you are in any other mutual fund.
Minimum Investment
The minimum amount you can invest usually ranges from ₹10,000 to ₹15,000, so investing in REITs is within the reach of most investors.
Thus, it makes the possibility of earning passive income from REITs open to all, even beginners.
How Do You Make Money from REITs without Doing Anything?
The REITs get the rental income from the commercial spaces that they own, for example, the office buildings that are being rented by the big companies.
Here is how you make money from it,
Regular Dividends
REITs must distribute at least 90% of their income to investors. This means you get steady cash payouts regularly.
Capital Appreciation
Over time, the value of REIT units can rise. If you sell them later at a higher price, you make a profit.
Portfolio Diversification
REITs help you add real estate exposure to your investments without buying property directly.
In short, REITs give you a steady way to earn passive income from REITs with minimal effort.
The Leading REITs in the Indian Market
Top REITs in India
A few recognised REITs operating in India are as follows:
- Embassy Office Parks REIT
- Mindspace Business Parks REIT
- Brookfield India Real Estate Trust
These REITs own large office spaces in cities like Bengaluru, Mumbai, and Hyderabad, leased to top companies. They have a good track record of paying regular dividends.
Advantages of REIT Investing
- Regular Income – You regularly get dividends.
- Minimal Investment – You can begin with small sums.
- Liquidity – Selling REIT units on the stock exchange is simple.
- Professional Management – All rental and property management is done by professionals.
- Diversification – Spreading your risk over multiple properties.
Because of these benefits, REITs are an excellent choice for people who wish to earn passive income from them without actually holding any real estate.
Conclusion
REITs are one of the easiest ways to earn passive income and to grow your money in the long run. You will not need to buy or manage properties. A small investment can lead to a steady income and capital gain.
The Indian real estate market is expanding, and REITs are a safe and smart way to get that growth without the stress of property maintenance or tenants. If you are searching for a long-term and stable income, then REITs can be a significant part of your investment plan.
