FAQ
Why don't I just buy a REIT?
You can buy a REIT, if you are willing to accept three distinct risks:
- Stock market risk
- Management risk
- Property risk
REIT shares are traded on the stock market. The stock market may tumble, bringing down the REIT, regardless of its individual performance. Even if the REIT is doing well, REIT managers may enrich themselves at the expense of the shareholders. Finally, REITS must buy a large portfolio of houses, in many locations. Often REITS mix commercial, retail, and residential apartments in a single portfolio. Thus you are exposed to significant property risk in sectors you might not want to own.
As an independent real estate buyer/owner, you have no stock market risk. You are the manager, and you choose the properties. You control the investment directly.