Why I Quit Buying Real Estate To Buy REITs Instead

Why REITs earn higher returns than rental properties? There are 10 reasons. In short: REITs enjoy significant economies of scale. They develop their own properties. They skip brokerage fees. They do sale and leaseback transactions, etc. To give you an example: Realty Income $O has managed to generate 15% annual returns for its shareholders by buying Class A net lease properties with a conservative 30% LTV. Most private net lease investors would have been happy to earn a ~10% return.

Why REITs are safer than rental properties? REITs are liquid, professionally managed, diversified, less leveraged investments and shareholders enjoy limited liability. With the right adjustments, REITs are also less volatile than rental properties.

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Image sources: Realty Income, NAREIT, EPRA, Cambridge, YCHARTS, Canva

Important Disclaimer: Leonberg Capital OÜ is long O. This video is impersonal and does not provide individualized advice or recommendations for any specific person. Viewers/readers should not make any investment decision without conducting their own due diligence and consulting their financial advisor about their specific situation. This video is for entertainment purposes only and you are responsible for your own investment decisions. The information is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The opinions expressed are those of the publisher and are subject to change without notice. This YouTube channel is managed by Leonberg Research OÜ, a subsidiary of Leonberg Capital OÜ.

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[askjussi]

I present 10 reasons why I prefer to invest in REITs than rental properties. Did I miss anything?
Thank you for all your support. If you could 'like' the video, it would help me a lot. Thanks!
Jussi

[talgui]

Yep, people forget that real estate is extremely time consuming and time is money. REITs is freedom investment. Greetings from France 🇫🇷

[Lanark]

Liquidity is so valuable in real estate. DCA into a portfolio of reits and get on with your life.

[abdulrahman]

What a great analysis. You've answered all my questions. I knew someone who ended up committing suicide because his tenants trashed the property. Didnt pay rent for months. He ended going into debt. And that snowball effect works both ways.

[TwinJalanugraha]

4000 shares of Realty
Income here... No one calls me in the middle of the night to fix a broken toilet

[MuzixMaker]

Being a landlord is a pain in the ass.

[davidwysocki]

Another outstanding video presentation on the advantages of investing in quality REITs. Thanks, Jussi!

[TheRatedD]

*_Well said. It's funny to think of some people I know, that went out of their way to buy buildings or land in bad locations, just to say they have investments, while I have large amounts of money invested in REITs like O and STAG, lol_*

[YujinVasquez]

I was waiting for you to publish this video as I've read tons of your articles on SA with this exact title lol.

[thebunnyfoofoo]

This has a bunch of great info. Probably will watch a couple of times to get all info in. Thanks for your videos

[johnhansen]

Clear, concise explanation. I just bought another large position in Realty Income (O) today. Excellent reviews from analysts and it is trading close to its 52 week low. You should say "do me a favor" not "make me a favor"....I am not critizing ...your English is EXCELLENT....just a few some mistakes once in a you! 😃

[mercedesgarcia-dwfo]

REITS stocks lose value over time, and private property gains in value every year. Is way safer to be in control of your own money than allowing a bad news takes 40% of your investment!!

[Edoc-kcmn]

Thank you for the value information bud! Your doing great!!

[shadownoobnoobslayer]

REITs u do not have to do any repairs or struggles to fill vacancies or have problems with difficult tenants cause landlords problems by failing to pay rent, causing property damage, or breaking property restrictions regularly. On top of all dat all u need to do is watch your taxes and value of REITs you buy and all dat is like 2hrs of time per month nothing in compering it to Real Estate and time and care you need to put in it...

[gunnergreg]

Solid as a rock analysis, thanks from Belgium 👌🇧🇪

[osirismalu]

Merci beaucoup pour cette information. J'investit aussi dans ETF R.E.I.T ( VNQ) et tant d'autre

[Lanark]

I would be interested in the trial but like most people I am not giving up my credit card info until I see the value. This is where so many on SA fall down.

[AlchemistInvesting]

What is your thoughts on REITs vs. investing as a LP in a syndicated real estate deal on for example a class-B apartment? The year to year returns/cash distributions are about the same 7-8%. On a 5-6 year hold period, most deals seem to generate around 19-20% rate of return with more tax advantages compared to the REITs. I go back and forth on which is better based on diversification, management team, liquidity, etc.

[jonathanduran]

Not understanding the leverage part.. if I buy a 300k home with 50k down and it the price appreciates 10 percent, I’ve made 30k in equity. If I put 50k in a REIT that goes up 10 percent, I’ve made 5k. How is it that you claim that the leverage is the same?

[stevenwoodford]

Are you doing anything on that substack newsletter? Is the other subscription more active?
Thanks