Real Estate VS REIT (Real Estate Investment Trust) - Which is a better investment?

Real Estate VS REIT (Real Estate Investment Trust) - Which of these two is a better investment?

First of all, what is a REIT?
REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of property sectors. These real estate companies have to meet a number of requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors.

Are REITs Good Investments?
Investing in REITs is a great way to diversify your portfolio outside of traditional stocks and bonds and can be attractive for their strong dividends and long-term capital appreciation. So yes, they can certainly be a good investment.

Earning money from a publicly owned real estate investment trust (REIT) is like earning money from stocks. You receive dividends from the profits of the company and can sell your shares at a profit when their value in the marketplace increases. A REIT often can provide a reasonable return of 5–10 percent or more.

So what is a better investment for you? Real estate or REIT? Well, this will depend on many factors that we are going to cover in today's video.

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[donovanmic]

My biggest reservation about owning real estate as an investment is that it can’t be moved so you are at the mercy of the government of the place where the property is located. There are always more voters who pay rent than collect it, so rent controls, special taxes on nonresident owners, confiscation of vacant properties, complicated procedures to collect rent or evict non-paying tenants … etc. are always risks. Reits usually hold many properties in several jurisdictions, which helps to dilute these risks.

[peaceonearth]

Hard to do, but all these investment ideas need to be presented with their pros and cons in some possible future scenarios. imo. Such as, what if there's a depression? How would that affect liquidity of the asset? What about if the value of money changes as well?

[mkishon]

I think the USO analogy is flawed. USO vastly underforms investing in oil directly because of contango bleed. If there were a perpetual swap for Oil, its performance would virtually match the underlying commodity. But I agree with all the other reasons that a REIT and RE are different.

[Fhfjdodebrmsowe]

Reits have the same factor expouse as a mix of 60% small cap value and 40% high yield bonds, without the idiosyncratic risk.

[holeefuk]

Sounds like same arguments could be made for private vs public equity investments

[nodoubtbb]

What are your thoughts on buying and holding REITs as a means to get RE growth exposure until you can afford to buy a house.

[alfinal]

In theory, REITs can benefit from economies of scale and professionals. But in practice YMMV

[flsupraguy]

I think REITs are only good short term. The tax deferring alone typically makes physical real estate the winner unless a bear market is immenement....

[alfinal]

REITs can hedge a bit squatter laws. If you have a sole rental property a single squatter can ruin your finances.

[FighterFred]

To buy real estate using loans at the height of the bubble and the fiat system in big trouble is high risk. Much better to stay liquid until the system crashes. Or buy cash for something you want permanently for yourself.

[HyperspaceHoliday]

REITs are really property management companies and not really property investment. You're totally at the mercy of their management competencies and their leverage. When you own properties directly, you have control over the amount of debt and how they are managed.
However, REITs do have liquidity in the case you need to seel quickly

[jimmccann]

How can you do a video like this without addressing Counter-party Risk? Gold, of course, is the extreme example of this:
In a severe financial crisis, only the gold buried in your back yard is yours. Gold in ETFs and in other peoples vaults is very liable to vanish. (Many, many scandals of this sort!) The house you live in, debt-free, you can probably hang on to. But what about your REITs? In a crisis, are these going to be asset-stripped by preferred creditors, leaving investors as Empty-Paper-Bag-Holders? Doubtless, you are familiar with the Bail-In legislation already passed by most Western countries. Is this not going to be quite similar? The world has never been more indebted than it is now, and investing in 2022 requires considering what happens if it all goes really, really sour...