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Originally Posted by Slava
^ well the $100k you put in generates a higher return in the apartment owning scenarios because of the leverage (there’s $650k invested and the return on that is higher than $100k invested in the REIT scenario). I don’t think you need a calculator for that.
But I would caution you that while it magnifies your returns, leverage also magnifies the loss. So if you have a 5% decline, you’re out $5000 on the $100k REIT and let’s say $30k on the apartment building. I think a lot of the other potential issues have been covered by other posters here; the maintenance/taxes etc that you have as a property owner that you don’t have as a REIT owner.
I guess if you wanted a pure apples to apples comparison though, you could run a return scenario of the apartment ownership vs. a 5:1 leverage loan invested into a REIT. I’m not suggesting that you should embark on that as a course of action without professional review and advice, but it would give you a more equal comparison in terms of returns.
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Don't forget about taxes... I believe the rental income is charged at regular income tax rate... Investment income is capital gains/dividend tax which is a lower tax rate