REITs or rental property for long-term passive income?

real estateinvestingpassive income

Greg_77

Joined:
05.07.2023
Posts: 433

Topic Starter

17.01.2025 09:52

I've been saving up a decent amount of capital and I'm trying to decide between buying a physical rental property or just dumping the money into REITs. I love the idea of owning physical land, but the thought of middle-of-the-night maintenance calls and dealing with bad tenants sounds like a nightmare. On the other hand, REITs seem much more hands-off, though I worry about the lack of control and how they might react to interest rate hikes. Has anyone here pivoted from one to the other, or do you prefer a mix of both? I'm curious to hear your experiences regarding the actual effort involved versus the returns you've seen.

18 replies in this topic

lone_wolf

Joined:
22.10.2019
Posts: 1274

01.02.2025 19:38

Honestly, physical real estate is a second job. Unless you have a great property manager, don't underestimate the headache of tenant issues.

Lida_C

Joined:
27.09.2019
Posts: 957

16.02.2025 08:10

In reply to a previous post

I started with physical rentals but sold them all last year. The peace of mind I get from REIT dividends is worth the slightly lower control.

curious_k

Joined:
06.03.2023
Posts: 221

25.02.2025 18:19

REITs are definitely better if you value your free time. I don't want to be fixing toilets on a Saturday.

sunday_guest

Joined:
01.05.2020
Posts: 131

31.03.2025 06:03

In reply to a previous post

Have you considered turnkey properties? You get the physical asset without the day-to-day management.

Iggy_R

Joined:
11.12.2020
Posts: 2115

07.04.2025 00:37

In reply to a previous post

Turnkey is okay, but the fees eat up your cash flow. You're better off just putting that money into a high-dividend REIT ETF.

tech_geek

Joined:
27.05.2022
Posts: 1368

08.04.2025 06:40

It really comes down to leverage. You can't get a bank loan to buy REITs like you can for a rental property. If you want to scale fast, physical is the way.

camilo

Joined:
12.09.2023
Posts: 760

21.04.2025 12:46

In reply to a previous post

That's a good point about leverage, but don't forget that debt is a double-edged sword when interest rates go up.

KnowItAll

Joined:
11.06.2024
Posts: 1094

04.05.2025 00:41

I prefer a mix. I have a few REITs for liquidity and one rental property for the long-term appreciation and tax benefits.

Eugene_D

Joined:
13.03.2024
Posts: 879

21.06.2025 04:24

In reply to a previous post

Exactly this. The tax write-offs on physical property are huge compared to REIT distributions.

Brian_Z

Joined:
14.06.2020
Posts: 1264

18.07.2025 11:34

REITs are just stocks at the end of the day. They have high correlation with the broader market, which defeats the purpose of diversification for some people.

curious_k

Joined:
22.11.2024
Posts: 2494

26.08.2025 18:15

In reply to a previous post

Agreed. When the market crashes, my REITs tank just as hard as my tech stocks.

Tony_M

Joined:
27.12.2023
Posts: 2468

20.09.2025 10:06

I've been a landlord for ten years. It's not as scary as people make it out to be if you screen your tenants properly.

Profit_Maker

Joined:
27.12.2020
Posts: 1712

29.09.2025 23:33

In reply to a previous post

You've been lucky then. One bad tenant can wipe out a year's worth of profit in legal fees and repairs.

Nadia_D

Joined:
26.08.2025
Posts: 1502

26.10.2025 06:19

If you want passive, keep it passive. REITs are the only true passive income play here.

chris_1982

Joined:
29.08.2025
Posts: 2018

15.11.2025 18:34

Just buy a REIT index fund and forget about it. Don't overthink the control aspect; you're not going to be able to influence a physical property's value much anyway.