REIT Dividends vs. Direct Real Estate Investing Rents

Many think that investing in REIT stocks is similar to investing in real estate directly, but I have some arguments to point out the differences.

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[vlzomqk]

Why is he trying to sound so smart and arrogant like he knows everything in this world and meanwhile every stock he recommend is down 50 - 70 %. He scrapped youtube portfolio because it was down big too.
In this video he says buy own property for 100K refurbish it and sell for 200K, like it super easy and everyone can do it, why invest in REITS ?
Or buy own property at 8% cap rate and rent it.
In today environment decent apartment in Spain in touristic area is 250K. Min down payment is 30% means you need to save at least 100 000 K (There are 20K + mortgage expenses) Then you get 150K 30 years mortgage with 5% interest and 800 monthly down payment. Monthly rent if you are lucky is 850 - 900 euro and then minus taxes. At the end the rent is just covering monthly down payment and you are super leveraged. LTV is 70%.

Isn't better then to invest 100K in div paying stocks + REITS for instance 5% Yield (5000 euro a year) and no leverage no down payments ?

Are you recommending to buy own properties at all time high + expensive mortgage meanwhile REITS have discount to NAV 30 - 50 % ?

Or I dont understand smthg ?

[RichardAgain]

I disagree with the management fees for REITs being the cap rate - dividend yield. The money not distributed will be reinvested in new properties for the REIT, improving the future earnings and future dividend yield. Thus the value of the REIT inceases. How is that a management fee?

[realestalex]

Right now I am getting 9-10% in my Mexican industrial REITs, I definitely can't afford my own property and I think I am fairly positioned to take advantage of the nearshoring effect in Mexico right now, so REITs are the place to be for me at the moment.

[joegomez]

Nice video. The only thing better about publicly traded Reits is liquidity. You can buy and sell them with very little transaction fees. Buying and selling your own properties will cost you between 5-10% depending where you live.

Owning your own property is great if you can buy them at a good price and manage the property yourself.

[YusifRefae]

Thanks for the shout out Sven!! This channel inspired me to get that MBA finally. 3 more weeks til graduation :-)

[PeriMCS]

Return on properties in Poland is around 4%. I prefer dividend of 5.5% and no work.

[stevenupton]

you have nt personally leveraged the REIT, thats like saying if you have a mortgage you have taken on the banks leverage, the comparison is on capital employed, so the downpayment on the mortgage v your investment in REIT, if you compare the risk on a mortgage with REIT the mortage is 100x more risky ask dave ramsey, your risk on the REIT is it going to zero, on the house miss payments you get repossessed losing your job or inflation are far more likely than the REIT going bankrupt, this is poor research sven where are your foreclosure to REIT bankruptcy figures, i have both my own house paid for and REITS, i have also rented properties to tennants trust me it can be like a job and it is stressful, you also assumed everybody has the downpayment and payments on a huge mortgage wheras you can buy a fractonal share in a REIT for $1, have you let personal bias influence you here?

[WarrenBuffettDividend]

Its never going to be 100% because its the cost of materials and your "own time money" because you could be at home with family or being at work making 25-30 dollars/euros per hour.
Renovate a house take months of actually WORK.

[kashganja]

alot depends where you buy the real estate, what country you live in what gets extra taxed etc.

[TheRustyLM]

What about Argentina investing ?
PAM, CEPU, YPF, LOMA, IRS?
Agriculture/fertilizer?
INGR, FMC, UAN

[josebalvin]

I think, you get more profit when you buy reits in recession than real estate in recession on mortgage, there are also lower costs, time wasted and lower taxes

[caucasianafrican]

I pay 8% for my rentals to be managed. It's 100% worth it for me.

[PeriMCS]

You say like you were a flipper. But you sold one house because you were moving. Not because you planned.

[jdr]

The answee for me is:
- Private real estate only 100% cash
- If leverages RE only in a limited company. If things go south you close it
- REITs as speculation on a smaller scale

[mjwmontgomery]

I think that for personal real estate the real costs are about 30% of the rent..the estate agent may take 1 month per year.. the building management costs and depreciation on fixtures and fittings..plus periodic renovations, repair costs, vacant periods, tenants that trash your home, tenants that leave without paying the last rent.. rent arrears..etc. some can be reduced by good tenant selection..but even that is no guarantee. Personally i like european shopping center reits. In expensive markets like Luxembourg, you will be lucky to get 3% net yield.

[armanidesigner]

Depends if you want to invest or do business. You can not compare reits to real estate, because with real estate there is time wasted. Compare reits to stocks or etf like vwce and compare real estate to real business with time wasted.

[PeriMCS]

You also forget that you need hundreds of thousands if not millions in your currency to buy any property. You can invest 1$ into reit. So maybe for very few this is alternative.

[dogtownewok]

Shouldn't we be looking at FFO yield instead of dividend yield?

[ussul]

You are correct. This might be sort video, but it has bigger value then most plp might understand. You buy if they lower the price and noone wants to touch it. Then on hype you might sell it. Same with stock. Good company or real estate on good address.

[tsonez]

I have invested directly in RE and they have been my worst investments. I don't recommend unless perhaps the RE is your own home. REITs come with agency costs partially because they remove the need to personally put in the work to maintain and improve the RE value. It's of course debatable what price is right for the REIT agency cost. But regardless, that agency must be in some form value-creating because the REIT investors are willing to pay for it.