Real estate is one of the most popular and profitable asset classes for investors. However, buying and managing physical properties can be costly, time-consuming, and risky. That's why many investors choose to invest in real estate investment trusts (REITs) instead.

REITs are companies that own, operate, or finance income-generating real estate assets. They can invest in various types of properties, such as residential, commercial, industrial, or retail. REITs pay out most of their earnings as dividends to shareholders, which can provide a steady income stream and tax benefits.

However, not all REITs are created equal. Some REITs focus on specific sectors or regions, while others diversify their portfolios across different markets and countries. Investing in international REITs can offer several advantages, such as:

- Exposure to global growth opportunities and emerging markets
- Diversification of risks and returns across different economic cycles and currencies
- Access to unique and niche real estate segments that may not be available in the domestic market
- Potential for higher returns and lower fees than domestic REITs

However, investing in international REITs also comes with some challenges and risks, such as:

- Currency fluctuations and exchange rate risks
- Political and regulatory uncertainties and changes
- Higher volatility and lower liquidity than domestic REITs
- Tax implications and complexities for foreign investors

Therefore, investors need to do their homework and research before investing in international REITs. Here are some tips and steps on how to invest in international REITs with low fees and high returns.

Step 1: Choose Your Investment Vehicle

There are different ways to invest in international REITs, depending on your preferences, goals, and risk tolerance. Some of the most common investment vehicles are:

- Individual REIT stocks: You can buy shares of individual REITs that are listed on foreign stock exchanges. This gives you direct exposure and control over your investments, but also requires more research, due diligence, and monitoring. You also need to consider the trading costs, commissions, and taxes involved in buying and selling foreign stocks.
- REIT ETFs: You can buy exchange-traded funds (ETFs) that track the performance of a basket of REITs from different countries or regions. This gives you instant diversification and access to a wide range of international REITs with a single purchase. You also benefit from lower fees, higher liquidity, and tax efficiency compared to individual stocks. However, you also have less flexibility and customization over your portfolio, and you may incur tracking errors or deviations from the underlying index.
- REIT mutual funds: You can buy mutual funds that invest in a portfolio of international REITs, managed by a professional fund manager. This gives you the advantage of expert guidance, active management, and regular rebalancing of your portfolio. You also have more choices and options to suit your investment style and objectives. However, you also pay higher fees, commissions, and expenses than ETFs, and you may face lower liquidity and transparency than individual stocks.

Step 2: Choose Your Investment Strategy

Once you have decided on your investment vehicle, you need to choose your investment strategy. This means deciding on your investment objectives, time horizon, risk appetite, and asset allocation. Some of the factors to consider are:

- Your investment goals: What are you investing for? How much money do you want to make? How much income do you need? These questions will help you determine your target return and dividend yield, as well as your growth and value preferences.
- Your investment horizon: How long do you plan to hold your investments? When do you need to access your money? These questions will help you determine your liquidity needs and risk tolerance, as well as your short-term and long-term perspectives.
- Your risk appetite: How much risk are you willing and able to take? How much volatility can you handle? These questions will help you determine your risk-reward trade-off and diversification level, as well as your defensive and aggressive tendencies.
- Your asset allocation: How much of your portfolio do you want to allocate to international REITs? How do you want to diversify your portfolio across different countries, regions, sectors, and styles? These questions will help you determine your optimal portfolio mix and balance, as well as your strategic and tactical adjustments.

Step 3: Choose Your Investment Criteria

After you have chosen your investment strategy, you need to choose your investment criteria. This means deciding on the factors and metrics that you will use to evaluate and select the best international REITs for your portfolio. Some of the most important criteria are:

- Market capitalization: This is the total value of a REIT's outstanding shares, calculated by multiplying the share price by the number of shares. Market cap indicates the size, scale, and stability of a REIT, as well as its growth potential and risk profile. Generally, larger REITs tend to be more established, diversified, and resilient, but also more expensive and slower-growing. Smaller REITs tend to be more nimble, innovative, and opportunistic, but also more volatile and risky.
- Dividend yield: This is the annual dividend paid by a REIT per share, divided by the share price. Dividend yield indicates the income and cash flow generated by a REIT, as well as its valuation and attractiveness. Generally, higher dividend yields are more appealing to income-oriented investors, but they may also signal lower growth prospects or higher risks. Lower dividend yields may indicate higher growth potential or lower risks, but they may also reflect overvaluation or underperformance.
- Funds from operations (FFO): This is a measure of a REIT's operating cash flow, calculated by adding depreciation and amortization to net income, and subtracting gains or losses from property sales. FFO indicates the profitability and sustainability of a REIT, as well as its ability to pay and grow dividends. Generally, higher FFO is more desirable, as it shows that a REIT is generating enough cash to cover its expenses and reward its shareholders. FFO growth rate is also an important metric, as it shows the improvement or deterioration of a REIT's performance over time.
- Price-to-FFO ratio: This is a valuation metric, calculated by dividing the share price by the FFO per share. Price-to-FFO ratio indicates how much investors are willing to pay for a REIT's cash flow, as well as its relative cheapness or expensiveness. Generally, lower price-to-FFO ratios are more attractive, as they imply that a REIT is undervalued or offers a margin of safety. Higher price-to-FFO ratios may suggest that a REIT is overvalued or has high expectations.

Step 4: Choose Your Investment Options

Finally, after you have chosen your investment criteria, you need to choose your investment options. This means selecting the specific international REITs that meet your criteria and fit your strategy. You can use various sources and tools to research and screen for the best international REITs, such as:

- Financial websites and publications: You can find information, news, analysis, and ratings on international REITs from various online platforms and media outlets, such as Yahoo Finance, Morningstar, The Motley Fool, and Seeking Alpha.
- REIT indexes and ETFs: You can use REIT indexes and ETFs as benchmarks and proxies for the performance and characteristics of different international REIT markets and segments, such as the FTSE EPRA Nareit Global Real Estate Index Series, the SPDR Dow Jones Global Real Estate ETF (RWO), and the iShares Global REIT ETF (REET).
- REIT associations and organizations: You can access data, reports, insights, and resources on international REITs from various industry associations and organizations, such as the National Association of Real Estate Investment Trusts (Nareit), the European Public Real Estate Association (EPRA), and the Asia Pacific Real Estate Association (APREA).

Conclusion

Investing in international REITs can be a rewarding and exciting way to diversify your portfolio and enhance your returns. However, it also requires careful planning, research, and execution. By following the steps and tips outlined in this article, you can invest in international REITs with low fees and high returns.

FAQs

Q: What are the benefits of investing in international REITs?
A: Some of the benefits of investing in international REITs are:

- Exposure to global growth opportunities and emerging markets
- Diversification of risks and returns across different economic cycles and currencies
- Access to unique and niche real estate segments that may not be available in the domestic market
- Potential for higher returns and lower fees than domestic REITs

Q: What are the risks of investing in international REITs?
A: Some of the risks of investing in international REITs are:

- Currency fluctuations and exchange rate risks
- Political and regulatory uncertainties and changes
- Higher volatility and lower liquidity than domestic REITs
- Tax implications and complexities for foreign investors