Professional vs Traditional real estate investing

0 Comments

In this post we present a summary of the head to head comparison between the traditional real estate investing approach (i.e. buying a property) and professional investing in real estate.

TypeAdvantagesDisadvantagesHow


Traditional
1. Sense of security
2. Sense of ownership
3. Time horizon is long
1. Barriers to entry
2. Transaction delays
3. Large maintenance costs
4. Large set-up costs
5. Taxes can be substantial
6. Uncertainty in revenues
7. Risk is concentrated
8. Winner’s Curse
Local real-estate broker


Professional
1. No minimums
2. Fast execution and ease of investment
3. Significantly lower costs
4. Tax free
5. Maintenance costs are optimized
6. Diversification
1. Daily valuations create a sense of insecurity
2. Daily valuations shorten the investment horizon
UCITS ETFs