REITs vs Real estate

Sharing is Caring!

by etienner

I asked myself this question a few times and decided to do some research and I feel like some users would like to know what I found about the REITs vs Real estate debate:

Pros of REITs vs Real estate:

– Higher return on average

– Less risk (diversified REITs funds will never go to 0)

– More diversification

– REITs have management teams that have a lot of knowledge in the industry

– REITs are a lot more liquid

See also  China’s Real Estate Sector in Trouble?

– Less capital required

– You don’t have to find tenants, repair roofs, deal with tenants not paying/trashing the property

Pros of Real estate vs REITs:

– Having the ability to buy small properties at a good price (large REITs won’t compete to buy a $500,000 property)

– You can live in the property you bought

– Ability to have a higher return if you buy at the right price

– REITs can be be expensive/inexpensive at times (valuations are volatile), property prices are not as volatile.

See also  Chinese real estate isn’t the only risk to the global economy; tech giants in China are experiencing unprecedented losses

– tax deductions

– Possibility to have a higher leverage

– Lower correlation to the stock market then REITs, directly investing in real estate leads to more diversification

Obviously, I could be wrong and I could be missing out on a lot of points, feel free to comment and I’ll add your thoughts to the list!






Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.