REITs Investing - Pros and cons

5 Replies

As with any passive investment, you're typically giving up control and higher ROI, in return for diversification and passivity.

I prefer the higher risk, greater reward of syndications, but those certainly have their drawbacks as well.

I got burned buying REITs back in 2006, so given where we are in the market cycle, I'm personally not a fan.

All that said, I am in favor of diversifying whatever your real estate strategy. 

Agreed with @Neil Henderson . I would add that the advantage of REITs is that they're very liquid and you do not need a lot of money to invest.

I hold a small REIT position because it pays a healthy dividend and I had some IRA money that wasn't enough to directly invest in real estate.

@Charlie Moore

I think @Taylor L. gave you a pretty good explanation about REITs. In addition, think of it as a typical mutual fund. So whatever you earn is ordinary income and hence taxed at your W-2 tax rate. REIT investing has it's pro's and con's. You got to look at both to decide whether it makes sense for your personal case. Here's some more of education materials:

https://www.biggerpockets.com/member-blogs/10850/84063-private-equity-meets-stock-market

Originally posted by @Neil Henderson :

As with any passive investment, you're typically giving up control and higher ROI, in return for diversification and passivity.

I prefer the higher risk, greater reward of syndications, but those certainly have their drawbacks as well.

I got burned buying REITs back in 2006, so given where we are in the market cycle, I'm personally not a fan.

All that said, I am in favor of diversifying whatever your real estate strategy. 

In what ways did you lose? Can you please elaborate... They are required to PAY you a dividend forever... Am i Right?