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No. of Recommendations: 3
11 posted this in response to the board intro and I think it deserves it's own topic. Here is the original post, followed by my comments on it...

To get the ball rolling I'll lob this one out for comment:

With REIT's yielding 7-14% and in theory providing comparable appreciation potential and greater diversification and liquidity -

What benefits are there in investing in privately held fee simple real estate vs. publicly traded REITs?
(other than the "thrill of management")


The number one difference between equity investing and investing in individual real estate is leverage.

Unless you are crazy enough to purchase REITs on the margin (or using a credit card), to control $100,000 worth of REIT you need $100,000 in the bank.

To control $100,000 worth of individual real estate you need the willingness to experience the "thrill of management" and the willingness to get out and hunt for deals.

Make no mistake, buying and selling REITs is easy. If you have $$, you can make 7-14% with no trouble.

If you are willing to work harder, you can buy RE and experience much higher returns. I try to shoot for infinity. When I do have to put money down, I always try to recoup my initial investment within one year, so the return quickly goes towards infinity.

There are other advantages, such as a very favorable tax status, possibility of blistering appreciation, "pride of home/small business ownership", etc. But the main reason I invest in RE is LEVERAGE.


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