The difference between directly investing in a rental property and a REIT.
What’s the difference between directly buying a rental property and investing in a REIT? I’ve received that question several times lately, so today I’m sharing the pros and cons of both.
REIT stands for “real estate investment trust”; they’re easy to invest in, and you can choose the asset class. A REIT is like a mutual fund but specifies which type of commercial real estate it is. Investing in a REIT saves you a bunch of time, and you can get in and get out of the investment fairly quickly. However, you don’t get as much cash flow or the tax benefits of directly owning a property.
Investing in a REIT saves you a bunch of time.
When you own a rental property, you’re directly investing in it, which requires plenty of sweat equity. You choose the property, take care of the management, and do a lot of maintenance. You also have fewer choices in what to invest in compared to a REIT. However, you get quite a bit of cash flow and tax savings, and you have direct control over that property.
This is a great topic, so if you have more questions about it or anything else, I’d love to discuss them with you. Just call or visit my website.