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by sneeze-slayer
2508 days ago
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How is this conceptually different from paying rent and investing in a REIT? If I pay rent and invest in a REIT, I can move easily (as if moving were that easy) and I still have "equity" in real estate. In both cases the investment seems to be a stake in a real estate fund, so I'm struggling to figure out the difference. Or, is the value-add that it is automatically done for renters? |
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One big difference is that we wanted to feel like an owner of the home we were living in. It carries some emotional appeal and as we got further into planning out the business found there are some tax and return benefits as well.
A few problems we ran into with REITs available to us: - You pay a premium (lower yield) for access to public market liquidity - Public REITs are quite large and not really a great hedge against single family home values (they're invested in multiple property types and residential REITs are often focused on multi-family) - Market sentiment can change the value in an instant, and as a result, share price is not always based on the value of the properties. Not as big of an issue with long-term investing, but can be a problem during periods of time you may want to access the funds (like the end of a lease).