How to invest in REIT in India?

REIT or Real Estate Investment Trust is an interesting investment scheme in my opinion. In India, I believe there are not many people who know about REIT in India. So before telling you about how to invest in REIT in India, I would like to share what is REIT.

REIT is an investment trust just like mutual funds. These trusts seek funds from investors and invest it into real estate. The investors earn dividends earned from the capital gains accrued from selling the assets or renting them out. The income in the form of capital gains is taxable at capital gains tax rate.

To invest in REIT in India, you need to perform the following steps:

1. You need to open a DEMAT account to choose the IPO
2. Fill the application form, mention your DEMAT account number and code in it
3. Once your application is accepted, you will have to start bidding starting with a minimum 800 units.
4. After 800 units, you can increase your bidding in the multiples of 400 units

As per the rules suggested by the Government, 90% of the Net Profit is distributed among the investors whereas, 10%  or less is retained by the REIT.

There are various types of REITs. These are:

• Equity: In an equity, the major source of income is through rents. This type of REIT is focused on operating and managing income-generating commercial properties.
• Mortgage: In this type of REIT the income is generated in the form of interest that comes from money lent to proprietors. Mortgage REITs involve lending money to proprietors and extending mortgage facilities.
• Hybrid: In a hybrid REIT arrangement, the investor has an option to invest in Equity or mortgage or both.
• Private REIT: Private REITs are focused on a selected bunch of investors. A private REIT is not listed in the National Stock Exchange and is not regulated by SEBI.
• Public REIT: The companies in public REIT are enlisted in the National Stock Exchange and are regulated by the SEBI.
• Public Non-traded REIT: The companies in public REIT are not enlisted in the National Stock Exchange but are regulated by the SEBI.