REIT vs Real Estate Developer

Although both offer opportunities for generating income through premier real estate property, they have different roles in the overall scheme of things.

A Real Estate Investment Trust (REIT)

REIT typically purchases existing, fully-rented properties and distributes cash flow from them to their shareholders, which is a requirement that 90% of its net income be paid as dividends.

A REIT is a real estate investment company. That means that they own and hold title to real estate. They also most likely rent that real estate for profit.

Pros: suitable for any budget, higher than average dividends, and potential for appreciation

Cons: Property-specific risks

A Real Estate Developer

Pros: have more choices to consider.

Cons: require a significant amount of time and effort, illiquid.

Bottom line

Forbes: “Data Proves REITs Are Better Than Buying Real Estate

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