Gary Beasley who is the CEO/Co-Founder of Roofstock has an interesting look at owning investment properties versus investing in a REIT in a recent Forbes article, Buying Rental Property Vs. Investing In A REIT, Part I.
One of his best points I thought was the value of accruing equity when you actually invest in rental properties instead of investing in a REIT. Many REITs make excellent investments though as the offer professional management and access to large amounts of capital.
Investing Goal: Building Equity
While REIT investors can generate capital gains as the share price ideally increases over time, when you buy an investment property, you’re continuously building equity in a tangible asset. All the while, the tenant is paying your mortgage and your equity stake can increase as the value of the asset typically appreciates over the long term. Having more equity in your asset also gives you the ability to refinance over time and use the proceeds to buy additional assets and grow your portfolio.
Gary’s author bio was the first time I’ve heard of his company Roofstock.com, but it seems to have an interesting angle on offering single-family rental property investments.
Roofstock is the first online marketplace created exclusively for investing in leased single-family rental homes that generate cash flow day one. Created by investors for investors, Roofstock provides research, analytics, and insights to evaluate and purchase independently certified properties.