diy guide to: winning with reits

35 Pages·2017·1.27 MB·English

D.I.Y GUIDE TO: WINNING WITH REITS

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D.I.Y GUIDE TO: WINNING WITH REITS

Copyright © 2017/18 by Chlorophyll Inc. All rights reserved
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D.I.Y GUIDE TO: WINNING WITH REITS

D.I.Y GUIDE TO: WINNING WITH REITS

How You Can Develop A New Source Of Passive
Income In No Time

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D.I.Y GUIDE TO: WINNING WITH REITS

To your journey towards financial freedom.

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Content

PREFACE ................................................................................................................... 8
TO YOUR FINANCIAL FREEDOM ..................................................................... 13
Introducing REITs ............................................................................................. 14
What is a REIT? .............................................................................................. 14
The country that founded REITs ............................................................ 17
Why you SHOULD invest in REITs ......................................................... 18
How much money can I make from REITs? ............................................ 21
Financial Freedom, Fantasy vs. Reality ............................................... 21
How do REITs Grow? .................................................................................. 22
The Glory of REITs ............................................................................................ 26
Retail REITs ..................................................................................................... 26
Healthcare REITs .......................................................................................... 29
Industrial REITs ............................................................................................. 32
Hospitality REITs (Inclusive of serviced residence) ...................... 36
Office REITs ..................................................................................................... 39
CHERRY PICKING YOUR REITS ........................................................................ 42
Cherry picking your REITs ............................................................................ 43
Smashing through a REIT’s Income Statement ................................ 43
Property Financing ...................................................................................... 47
Other points to note in the Income Statement ...................................... 49
Currency Matters .......................................................................................... 49
Confusion among Yields ............................................................................. 50
Deciphering a REIT’s Balance sheet and its financing practices ... 54
Gearing Ratio .................................................................................................. 55
Financing Practices ...................................................................................... 56
Raising Receivables ...................................................................................... 58
RAPID FOCUS: BUILDING A STRONG REIT PORTFOLIO ....................... 61
Quick and easy way to screen for potential REITs .............................. 62
Enhancing your returns –The Secret Investment Strategy ........ 67
What to understand before implementing any method .............. 69
Right issues, to buy or sell them? ................................................................ 71
Basic rights ...................................................................................................... 71
To Buy or Sell the rights? ........................................................................... 71
BECOMING YOUR OWN PORTFOLIO MANAGER ...................................... 73
How to tell if my REIT made a wise buying decision ......................... 74
Aiming for “yield accretive” ..................................................................... 74
Truly yield accretive .................................................................................... 77
Yield Accretive or not, let’s look at the reason ................................. 78
How to value REITs ........................................................................................... 80
The 2-step method to value any stable REIT .................................... 81
The Dividend Discount Model (DDM) made easy ........................... 87
Managing your REIT portfolio well ............................................................ 89
Tip 1: Focused Reading .............................................................................. 89
Tip 2: What to do if you see these negative changes ..................... 90
Tip 3: Hand phone APPs to help you track your REITs
performance .................................................................................................... 91
SHOW ME THOSE MONEY MAKING REITS ................................................. 93
Finding Winners in peculiar places ........................................................... 94
Haven for REITs unitholders? ................................................................. 94
Tease me with 3 interesting REITs ....................................................... 95
Tease me with another 3 exclusive REITs ......................................... 97
End ...................................................................................................................... 98
Question & Answers ........................................................................................... 101
D.I.Y GUIDE TO: WINNING WITH REITS
Preface

My story
I
made my first proper investment in 2008 when I was in
the forest, training with my Army mates. That was the
year also known as the “great recession”, where the
talking point on every investor’s mind was the fear of who
would default next.
Just like the rest of the investing world, the thought of losing
my hard-earned money in an instant made me hesitant to
make my first investment.
Back in the Army, there was a saying: “Great victories lie not
in falling, but in rising every time we fall.” Although the quote
referred to one’s determination and not “investment wisdom”
per se, it gave me that extra nudge to invest back in 2008!
I rationalised that if I did not put my savings into investments,
where else could I put it? Definitely not in a bank, bonds or
mutual funds where the interest rates and returns were
horrendously low (and still are); I needed to make my savings
work harder and realise my dream fast.
But how would I start? How would I know which stocks to pick?
I found my answers through reading and understanding the
many books, articles, and journals on fundamental investing
and formed my methodology for picking undervalued stocks.
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D.I.Y GUIDE TO: WINNING WITH REITS
I decided to test this methodology, and managed to find a
single stock that fit all my criteria.
Turning theories into action, I decided to press the “Buy”
button on my trading screen. The transaction was fulfilled, and
I became a shareholder, an owner of the business. That
thought made me feel accomplished. Then seconds later, the
price of the stock fell further, much to my amusement and
annoyance.
Now looking back, the feeling of regret overwhelms me, not
because I bought the stock but rather because I didn’t buy
enough of it.
You probably have already guessed that my very first holding
stock was a REIT, and it has given me consistent annual yields
of at least 11% since 2008.
Fast forward to my university days. I was fortunate enough to
enter one of Asia’s most prestigious business schools where I
had the time of my life. I had easy access to so many financial
databases and research articles, as well as Bloomberg and
Reuters at my fingertips, and I was surrounded by professors,
industry practitioners and investment-passionate friends from
whom I could learn and gain insights.
I had plenty of time to refine my methodology to screen for
REITs and other undervalued companies.
Despite a few bad investment picks, I had managed to build a
decent portfolio of stocks and REITs that were delivering solid
results year after year. The dividends that I received in the
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D.I.Y GUIDE TO: WINNING WITH REITS
financial year of 2013 were enough to fund my entire
graduation trip to Japan!

Workforce
In the workforce, I realised that working life can take a toll on
you. The people around me were different, and their priorities
changed. Topics of interest among many of my working peers
were how to make ends meet or why the government always
seem so adamant in moving their ends further apart.
Jokes aside, some of my colleagues who have worked for over
15 years were unfortunate enough to become victims of their
unwise investment decisions. That is terrifying to hear – to
realise that so many years of your hard-earned savings can be
wiped out in just seconds.
The reality of working life has led me to realise these painful
truths as to why so many are not investing prudently:
1. Too much sight, too little mind
There are so many headline-worthy books out there teaching
people how to invest. But many of these books are theory-
focused rather than application-focused. Just pick up any
investment book and it is usually more than 100 pages long,
full of theories shrouded in paragraph after paragraph yet not
getting to the point. After a while, the busy individual will
likely lose sight of what he/she has read and not apply the
techniques and tips they have learned.
2. Poisoned by growth
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D.I.Y GUIDE TO: WINNING WITH REITS
A lot of individuals out there are obsessed with beating the
market by constantly searching for the next Facebook or
Google. That growth is certainly important, but people forget
that monitoring a growth portfolio requires much effort and
time. Unless the individual has outsourced the investment
monitoring elsewhere, my stance is that the busier the
individual is, the more passive the personal investment
portfolio should be.
3. Not understanding what is being invested
Lastly, people usually lose money because they simply do not
understand the risks behind their investments. From
Collateralised Debt Obligation (CDO) to currency trading, time
and again people forget that it is usually the stable and boring
stocks that bring you excellent returns, albeit slowly.

Purpose of this ebook
Taking all these realities into consideration, I am exhilarated to
share with you my investment methodology on how to select
performing REITs, and also bring forth a portfolio that can be
easily managed and generate a secondary income for you.
That is why quotes are strategically placed in the book to help
you better understand the chapters. I must mention the quotes
in the book as they contain the investment wisdom that was
painstakingly gathered from industry practitioners. Putting
them into practice has done miracles for my REIT investments
and should do likewise for you.

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