We have a lot of clients with real estate interests and ask which is better-real estate in REIT form, real estate in private equity, or direct real estate ownership. Each has pluses and minuses-direct real estate ownership allows: Different ownership structures, tax flexibility and depreciation and passive activity losses in the year of sale, leverage.
Downside? Tenant management, lack of diversification of property location and types REITs: Preferred tax treatment of dividend income-can be income, return of capital or capital gains, there is a diversification of property locations and types, and a portfolio can hold a large number of REITs.
Private equity real estate: Can do opportunistic investments-repositionings, recapitalizations, hard money loans, re-developments, developments. The downside is that it can be risky if too much leverage is used, or that it’s deployed incorrectly. Of course this is an important topic for you and it requires more than a one minute video and a website. For more financial insight, go to the link on the bottom of your screen, enter your info and let’s stay in touch.