The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: MgoSam on June 10, 2013, 08:44:31 PM
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Does anyone know the research on this? If you were to put money into a REIT as opposed to buying a place and be a landlord, what are the tax benefits/cons? What are the ROI? What about if you take sweat equity? I figure that rental property has a higher average ROI, but it does require more time, stress, and risks than being into an REIT. What do you all think?
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Have you read the previous discussions around this topic?
You may want to chime in on one of those threads:
https://forum.mrmoneymustache.com/real-estate-and-landlording/rental-property-vs-investments/
https://forum.mrmoneymustache.com/investor-alley/reit-vs-rental-properties/
https://forum.mrmoneymustache.com/real-estate-and-landlording/reit-to-rental-real-estate-good-idea/
To briefly answer your questions: REITs are generally tax inefficient. Rentals have tax advantages. ROI completely depends on the particular investment. You can add sweat equity if you wish on rentals, it is not possible with REITs. Your generalization may be correct in some cases, but is not necessarily the case.
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If you are willing to put in the time and effort to learn real estate thoroughly then rentals are the way to go. If you want a hands off "exposure" to the property market then a REIT is a better choice. Also all the threads linked above.