REIT Shares or Real Roofs?

Paper Real Estate vs. Direct Ownership

Both own “real estate.” Only one lets you raise rents, leverage equity, and hand your kids the deed.

1 | Two Paths to Property Exposure

Public REIT (Ticker Symbol) Direct Ownership (Door & Deed)
Acquisition Click “Buy” in brokerage app 20–25 % down + financing
Liquidity Trade in seconds Sell/refi; slower but intentional
Leverage Typically none for investors 70–80 % LTV is common
Control Zero say in property ops Set rents, renovations, exit timing
Tax Shelter 1099-DIV; no depreciation pass-through Depreciation, 1031, cost seg, step-up
Yield History* 3–4 % dividends 5–10 % cash-on-cash typical

*Nareit equity-REIT average dividend yield 2014-2024.

2 | Why Investors Love REITs

Speed & Simplicity—no tenants, no toilets. Portfolio diversification. Daily liquidity.

3 | Why REITs Fall Short

  1. No Leverage Multiplier
    Your $50 K buys $50 K of exposure, period.

  2. Market Correlation
    Public REITs trade with equities—down 38 % in 2020’s first quarter.

  3. Tax Efficiency
    90 % of income must be paid out → taxed to you at ordinary rates. No depreciation offset.

4 | Direct Ownership: Stacking Returns

  • Appreciation on the Whole Asset (3–5 %/yr)

  • Tenant-Paid Amortization (equity every month)

  • Rent Cash Flow (5–10 % CoC)

  • Tax Shields (paper losses via depreciation)

Example:
$100 K down buys $400 K four-plex @ 6 % fixed.
Year-1 Net Cash Flow: $7,200
Principal Paid: $5,000
3 % Appreciation: $12,000
Total Gain: $24,200 → 24 % return on $100 K

Try replicating that with a 3.5 % REIT dividend.

5 | Risk & Responsibility Side-by-Side

Concern REIT Investor Direct Owner
Property repairs REIT handles Owner/manager handles
Share-price swings High Low (private valuations)
Tenant issues Diversified across portfolio Screen well, keep reserves
Illiquidity None Moderate (refi/sell)

Property management (8–10 % of rent) can offload headaches, turning real roofs into nearly passive income.

6 | Tax & Legacy Advantage Checklist

REIT Direct
Depreciation Write-Off ❌ ✅
1031 Exchange ❌ ✅
Cash-Out Refi (tax-free) ❌ ✅
Stepped-Up Basis to Heirs Limited ✅

7 | Financing Tools to Make “Real Roofs” Easy (loanfunders.com/wp/)

Goal Product Highlights
Buy first rental DSCR Loan up to 80 % LTV Qualify on rents, not W-2
Scale fast Portfolio Blanket Loan One payment for 5–10 doors
Force appreciation Bridge → DSCR Refi Rehab, raise value, lock 30-yr fixed

Brokers: White-label every loan—keep the client, we do the underwriting.

8 | Decision Snapshot

  • Want click-and-sell flexibility? 👉 REIT.

  • Want leverage, tax shields, and controllable cash flow? 👉 Direct ownership.

  • Hybrid? Hold a small REIT allocation for liquidity; park real wealth under real roofs.

9 | Conclusion—Own the Roof, Not Just the Receipt

REITs are a fine appetizer, but true wealth is built where you can raise rents, refinance equity, and pass a deed—not a ticker symbol—to your kids.

Ready to trade paper shares for tangible doors? loanfunders.com/wp/ structures DSCR, bridge, and portfolio loans that make direct ownership attainable—even if you’ve only held REITs till now.

Let’s put a real roof—and real cash flow—over your portfolio.