Landlord verus REIT's

[Ebony Harris]

Hi!

I'm new here and new to investing. Does anyone have any advice on which route I should take: REIT or becoming a landlord?

I know there are risks and aggravations involved with both. Which one worked best for some of you?

ElaHarris

[Angelo Behar]

@Ebony Harris Hello! I normally avoid this topics since they can get pretty heated, but I will share with you my thoughts on the topic. The comparison of REIT's vs land-lording depends on the level of involvement you would like. The REIT that I hold from Vanguard has an extremely low expense ratio, 0.10%. and a return since inception (2001) of 11.83% for VGSLX. Add a 4% dividend, capital gains and your returns are quite nice. And you're quite diversified with a REIT, 138 different companies holding $43.1 billion dollars in assets. You're 100k can get hedged and averaged into $43.1 billion dollars.

For the opposing side, you can buy 100,000 worth of property for $20k, rent it out and after expenses you should be cash flowing quite well if you do your due diligence. So you can leverage your $20k and hold property worth 100k, or use 100k to be a partial owner of a fund worth 43.1 billion dollars.

If you prefer not to be bothered with the possibility of, say, bed bugs, being sued, evictions, hurricanes (florida), natural disasters, etc, I would recommend a REIT. But be warned, a REIT is a roller coaster of volatility. VGSLX may be yielding 11+% since 2001, but you know that means years of massive losses and gains, but in the end you always own the same amount of shares. 100 shares worth 100 dollars may go down in value temporarily, say, to 100 shares worth $50 dollars, but you still own 100 shares. As the stock market has historically proven, in time, it always goes up, but so does real estate.

Decide the level of involvement you would like to have with your investment. There's also Turn-Key investing, which in my opinion falls in between, active landlord management, and a REIT. There's no right answer, it just depends on your investment style.