June 20, 2024


Mad about real estate

Why Join a Private Reit?

There are two primary reasons for considering a group form of investing:

First, there’s no minimum investment requirement imposed by the REIT. This means a lone investor can own a small share of a large high-yield property. This offers an individual with limited investment capital the opportunity of getting involved in real estate investing, and enjoy all the benefits of owning real estate—like regular monthly income, and the potential for extraordinary capital appreciation. As well, there is a preferential tax treatment that is unavailable to other types of investments such as mutual funds and mortgage investment companies.

The second reason for joining a larger group is to completely divorce yourself from the task of locating, analyzing, purchasing and managing your real estate investment. The syndicate/REIT does it all for you.

Benefits of an Asset Pool Structure

There are 20 excellent reasons to join a private REIT, and they are all listed in the BlueBook. Here are just a few of them.

Granted there are advantages of outright ownership of rental real estate, many investors still prefer syndicated ownership of properties because they are:

  • Diversified pools of real estate.
  • Chosen by acquisition specialists who carefully research and select the right properties, ones with the greatest chance of gain and the least likelihood of loss.
  • Run by professional asset managers who negotiate the best acquisition or sale price, and whose compensation is dependent upon the performance of the portfolio.
  • Managed by reliable property managers who continue to maintain the properties and look after the tenants.
  • Insured against all manner of risk, including insurance that continues to pay the full amount of lost rents in case of fire, or if new zoning does not permit the rebuilding of the same type of property; moreover, the investor has no liability for debt or litigation.
  • Hedged against interest rate fluctuations. To date, only League purchases hedging instruments that negate the effects of interest rate fluctuations.
  • Provision of steady monthly income. REIT’s are required to distribute to unit holders all the net income generated from rents and fees collected from the properties.
  • Extraordinarily tax-efficient. Regardless of the size of your investment, your marginal tax rate, your country of origin, or whether you pay tax as an employee or business owner, as a unit holder you’ll enjoy favoured tax treatment on the income you receive from the REIT.
  • Liquid. REITs have redemption rights, which—unlike direct real estate ownership—provide liquidity. To allow for this, the REIT sets aside a prudent amount of cash on a period-by-period basis to buy back units if an investor wishes to have them redeemed.


This article is presented by League Assets (www.league.ca). Visit League to get the Blue Book of Real Estate Syndication, a quick read which will teach you what you need to know about REITs.