There are two primary strategies to think about when increasing real estate investments: purchasing direct real estate or investing in REITs, or Real Estate Investment Trusts. I came to know about this from my friend, a real estate advisor. When I asked him which is better, he said it depends on your preference. But before investing, you must check out the REIT vs direct real estate difference. I have shared them below.
REIT vs Physical Real Estate Difference
Despite being completely separate concepts with quite different applications, REIT and physical real estate are unquestionably two sides of the same coin. My friend informed me of the pros and cons of both concepts, which I added here.
Investing in REITS
Investors can increase the amount of real estate in their portfolio without actually purchasing, managing, or taking on the risk of that property by using a real estate investment trust, or REIT. Any property that the REIT owns must be bought, managed, and finally sold by the REIT company itself.
Pros of REITs
Purchasing REITs is simpler.
A publicly traded REIT is relatively easy to sell.
A REIT is required to pay dividends to investors equal to at least 90% of its taxable income. They are typically a reliable source of passive income for investors.
Investing in real estate through a REIT may be far less expensive. Many of them don't even require a minimum investment.
Cons of REITs
There aren't any tax benefits.
No true sense of ownership exists.
Investing in Direct Real Estate
Investing in physical real estate involves buying a specific property or a portion of one, such as a building of residential apartments or a commercial retail space. Here are the pros and cons of investing in real estate.
Pros of Real Estate Investments
You can profit from tax advantages.
Direct real estate investing gives you the creative freedom of remodeling a home.
You have more authority over the property's management, when it is sold, and even who can rent the space.
Cons of Real Estate Investments
You are responsible for all the expenses.
Liquidation can be challenging and time-consuming.
At the end, he said, investments in REITs are simpler and easier to access than physical real estate, but they cannot take the place of purchasing your dream home. After going through these REITs vs direct real estate differences, I invested in direct real estate.
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Which is Better REIT vs Direct Real Estate?
Ayana8
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9 days
2025-06-13T07:51:40+00:00 2025-06-13T09:54:19+00:00Comment
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