I Ditched Real Estate Investing for REITs and Here's Why

I ditched real estate investing for REITs because they usually earn higher returns with lower risk. Example: Realty Income (O) has generated 15% annual returns, but most private net lease investors would have been happy to earn a ~10% return with the same strategy. Why do REITs earn higher returns than rental properties? REITs enjoy significant economies of scale. They develop their own properties. They skip brokerage fees. They do sale and leaseback transactions, etc.

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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Important Disclaimer: Leonberg Capital holds positions in the REITs mentioned in this video. 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.

#reits #dividend #passiveincome

[askjussi]

Make sure to subscribe to the channel as I will soon discuss some of my favorite REIT investment opportunities for 2025. Thank you for all your support and let me know if you have any questions.

[MartinD]

100% correct: The time and labor of personally dealing with rentals is a huge factor in calculating your costs/returns.
If you’re not adding the time and labor you spend with your rentals, you’re working for free or ignoring that aspect of the investment.
I will pay a group of professionals to manage and maintain my properties so I have time to do as a damn please every single day and night instead of answering phones and driving to hardware stores and properties.
Even if the actual cash on cash return is smaller, time will ALWAYS be more valuable.
If a person hasn’t learned that in life, they haven’t understood the concept of living off their own investments.

[macjackslack]

I love when you talk about this. Your interview on Bigger Pockets is my favorite episode.

[LjErickson]

Great video. I finally subscribed to your high yield landlord service. Appreciate all your videos. Look forward to seeing more of them

[muffemod]

It's your best video because it's a great video!

[jonathantaylor]

Excellent video, Jussi. I am a huge fan and RIETs. You have saved me from lots of headaches with tenants. Thank you.

[joeybru]

@Jussi Perhaps one day you want to look at the German/Austrian situation.
In D capital gain on stocks is taxed 26.1% (stock funds only 19%) -
however, leveraged properties can generate costs that SAVES you from some tax on your normal income (above 66k of which is taxed with 42% ).

Perhaps worth to develop some strategies for this situation.

[tymoed]

I absolutely agree especially if you’re looking to take out a loan, you have more flexibility when calculating the cashflow because u can borrow against your reit from different currencies, like jpy or Switzerland without even visiting them so your spread is probably gonna be higher if u take this route, also u can sell it at any time, nowadays people are terrified to buy houses due to the prices so it might be hard selling which is why u see a lot of owners post their mansions on YouTube for sale because the prices are absurd.

[tymoed]

I do understand why people preach real estate but are scared of reits, it’s simply due to the fact that you can see the numbers and the risks on the screen and the market so it’s overwhelming for most people due to fear, but it’s actually easier than managing a tenant or spending a portion of your income on a property management firm/team, as someone younger I’m going right to reits and later I’ll go to real estate because real estate is like a safety net in a way.

[ukikiki]

Hi Jussi. Thank you for all valuable content that we receive. I want to ask about area that you havent mentioned recentlt. What do you think about DEA and similar reits( gov rent properties). Thank you

[Sylvan_dB]

Every time I've tried to pencil out the potential of direct real estate investing, I have reached the same conclusion: Risk, work involved, vs the probable reward simply doesn't work for me.

[mikethomas]

Excellent job. I will now buy REIT investments and not be afraid of them.

[laurataylor-cx]

Very informative video! By the way: I have the OKX Wallet with USDT, and I have the seed phrase. (job priority warm lab border boil monkey manage palace fiber weird ask). What steps should I take to transfer them to Binance?

[tombostock]

Another great video! One question, how much of your portfolio is invested in REITs?

[AarniJunkkala]

Hei Jussi!
Where did you invest to real estate? Usa, Europe? Major cities or smaller places?
How long did you invest to real estate before you changed to reits?

[LFTRnow]

This is a well-thought out video and I generally agree, but I think both have their place. REITs make sense when you want to be more hands-off, and as for tax calculations, I'd recommend buying them in things like a Roth IRA so they aren't an issue. The "subprime" stock crash, drove many to hands-on investments like rentals. Rather than going to sleep with a stock at 20 and waking up next day with it at 4, and having the CEO happily drift way to safety on a multi-millions golden parachute (and these were REITs!) a bit of manual effort starts to look more attractive. Related to that, all you need is a good stock market crash and your REIT portfolio is now 1/2 or 1/3rd its original trading value. If you own property, you get that leverage on your own terms, and there's probably no tax cost until you sell and even then, in the US you have 1031 exchanges as an option. Finally, anything you buy for your business is probably tax-deductible, like computers, car expenses, home office, etc. It makes sense to have both, but if you want (mostly) hands-off income, the only option would be REITs, and they are generally a good option for all of the reasons you listed - as long as the company isn't mismanaged and/or the market has a massive subprime crash.

[hallowiegehts]

I was thinking about buying a small flat and renting it out here in Germany. But the calculations make no sense right now. A trash ass property 1 room apartment costs up to 200.000 Euros. Where you additionally need to renovate it completely. High reparation costs. In order to get 600 euros rent for some people making the hell out of your life with complaints.
I will stick to Reits for now as well.

[RogerYeahmon]

Could you clarify which country's tax laws you are describing in the "tax efficient" section? The laws you mention do not match those in my country so I'm guessing ths video was not intended for me.. Don't forget tax jurisdictions differ from country to country..

[calx]

Well, in Real Estate I cannot invest small amounts of cash like 100$, in REITs I can... Easy answer :)

[borisalbert]

Thanks for the great video Jussi 🙏🏻 do you know why safestore stock is going down so much? Is it maybe a buying opportunity? Have a nice week 🙋🏻‍♂️