Not everyone has the capital or desire to manage physical properties, which is where Real Estate Investment Trusts (REITs) come in. But how do they compare to direct property ownership?

🏢 REITs — The Passive Approach:
REITs allow investors to buy shares in real estate portfolios, often consisting of commercial properties, apartment complexes, and shopping centers. They’re traded on stock exchanges like the Toronto Stock Exchange (TSX), making them liquid and accessible. According to Morningstar Canada, Canadian REITs offered average annual returns of 7%-10% over the past decade.

🏡 Direct Ownership — More Control, More Responsibility:
Buying physical property gives investors control over decisions like renovations, tenant selection, and rental rates. While this can lead to higher returns, it also requires time, effort, and risk management.

💰 Tax Considerations:

• REITs: Distributions are taxed as income, not capital gains, which can affect returns.
• Direct Ownership: Investors can leverage tax deductions on mortgage interest, property taxes, and repairs.

Expert Insight:
“If you want stable cash flow without the headaches of property management, REITs are a great choice. But for hands-on investors, direct real estate can yield higher returns,” says Shaun Cathcart, Senior Economist at CREA.