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Assume the following scenario: A person wants to invest $100k in REIT or buying a rental property. (Assume a property management company is used so we don't need to compare the work from each.)

  1. What effect (if any) does getting a mortgage have for buying the rental property? Does this increase the long-term value of real-estate compared to REIT?
  2. Has someone measured the average capital appreciation of REIT vs owning a home over time? Is one a clear winner?
  3. Is there a measurable tax benefit to investing in real-estate? How big a difference should this make?
  4. Are there long-term average returns that should be used for owning a rental vs REIT to calculate an expected annual return?

Thanks!

BrenBarn
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Jonathan Winters
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1 Answers1

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I think that this mostly depends on your personality, not the return on investment. Are you willing to get nasty phone calls in the middle of the night about a busted water pipe? Can you weather the lack of income if your rental property goes unoccupied for a year? Are you willing to clean up after a resident trashes the place before moving out?

A REIT removes you from all similar considerations yet provide you with a reasonable income.

I am both a renter and an owner of a REIT.

Jack Swayze Sr
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