When it comes to commercial real estate, the traditional option involves purchasing your own real estate properties. You can then hire property managers to take care of the grunt work and profit off the top. Some California investors may even prefer to manage the properties themselves.
Over the years, REITs have grown in popularity. These allow investors to take an even more distanced approach from real estate investment and management. NerdWallet also reports that shareholders generally receive consistently large dividends. Is this the better option for you?
For some people, anonymous ownership works as long as it pays the bills. However, this does take away from your ability to build a real estate brand and pass on a true legacy to the next generation. If this matters to you, you may find it easier to achieve via purchasing your own properties.
Some real estate investors get into the market because they love real estate. They love buying properties, flipping them, finding new tenants and managing the properties. If you are passionate and want a hands-on real estate approach, buying properties offers a better option.
REITs require less startup capital than purchasing real estate property. This makes it especially attractive to people who want to invest in the market but lack the capital to go all the way in. It may also allow investors with leftover capital from larger investments to make use of smaller cash values not in use.
Registered REITs perform well in the market, but they do not provide all the perks of owning properties. They may provide an excellent starting point for investors or a complement for existing properties. When managed well, those physical properties may provide the opportunity for you to create your own publicly traded REIT that other investors can pour money into.