When will I start seeing returns?
As a Growth REIT investor, your returns will manifest in two forms:
Dividends are the profit generated from incoming rents. REIT investors receive a dividend every month from the rents that are collected. That dividend is automatically reinvested in order to fund the renovation of the properties.
Dividends are posted by the 15th of every month. If your investment cleared escrow this month, you will see your first dividend the next month. Your first dividend will be prorated for the number of days you were invested.
It’s important to keep in mind that the dividend does not represent your full return, only the cash flow from incoming rents. It doesn’t factor in the appreciation of the assets that happens over an extended period of time.
In real estate, appreciation refers to the increase in the value of a specific property. Your returns will come from both dividends and appreciation. Appreciation represents a far more substantial portion of the investor’s return.
The assets will appreciate both naturally over time and through forced appreciation via the renovations. The properties within the REIT’s holdings will experience two types of appreciation.
- Forced Appreciation: This is when the asset increases in value due to the investor’s actions. In the REIT’s case, the properties appreciate due to the renovations
- Natural Appreciation: Real estate naturally increases in value over time. The REIT’s 5-year term allows the properties to naturally appreciate resulting in a higher return.
The appreciation is realized at the end of the investment term upon the sale of the assets.