REIT vs Owning your rental units

[mickeyd]

A couple of years ago I felt that my asset allocation needed a change so I added Vanguard REIT as a diversifier. It is part of my Roth IRA so I'm contributing to it each year as it grows. 

Should I be invested instead in a actual local rental investment (house, small apt or storefront place) or should I stay with my REIT? I have the impression that owning rental property requires a lot of hands on attention (broken water pipe, roof repair, collecting rent, chasing out poor tenents etc.) I really do not want to mess with all of that.

Am I missing an investment opportunity when I am investing in REIT rather than a physical property that I can see, touch, etc?

 

[Martha]

I really do not want to mess with all of that.

I say only directly in rental real estate if you are willing to know your local market and aere willing to deal with the messy details.

 

[Arif]

I have the impression that owning rental property requires a lot of hands on attention (broken water pipe, roof repair, collecting rent, chaing out poor tenents etc.) I really do not want to mess with all of that.

It does require a lot of work. If you would like to avoid those "problems" then don't buy rental properties for the sake of diversifying your asset allocation.

 

[free4now]

Right now small properties are selling at very high prices relative to the rents collected. Larger rental properties have prices that are lower relative to the rents collected. So I'd go with the REIT that can buy the larger properties.