Real Estate Big Risks - Are REITs Really the Trillion Dollar Solution?

1 year ago
170

Owning real estate that you personally hold, rather than investing in a real estate investment trust (REIT), offers a number of potential benefits. One key advantage is the ability to have more control over the asset. When you own a property directly, you can make decisions about how it is used and managed, and you have the ability to make improvements or renovations that can increase its value.

Another benefit of owning real estate directly is the potential for tax benefits through depreciation. When you own a property, you can claim depreciation expenses on your tax return, which can help reduce your taxable income. This is not possible when you invest in a REIT, as the trust itself claims the depreciation expenses.

There are also potential cash flow benefits to owning real estate directly. If the property is generating rental income, that income can be used to help offset the costs of owning the property, such as mortgage payments, property taxes, and maintenance expenses.

That being said, there are also risks and challenges to owning real estate directly. These can include the need for significant upfront capital to purchase the property, the responsibility for managing and maintaining the property, and the potential for vacancies or other issues that can impact the property's income-generating potential.

Investing in a REIT can provide a more passive way to invest indirectly in real estate, without the need to handle the day-to-day management and maintenance of the property. It is important for investors to carefully consider their own investment objectives and risk tolerance when deciding whether to invest in real estate directly or through a REIT.

TOPICS AND TIMESTAMPS:
What Is A REIT? 0:00
How Do REITs Perform? 5:16
What Other Options? 7:50

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