Why not just buy fractional shares of a property?

Your comment doesn't really answer my question... you just typed the same observation from the other side. You've added nothing. Zero value.

I contributed the same value as you. Owning property and owning a REIT have very little in common other than a correlation in market value.

> Why not just buy fractional shares of a property?

Transaction costs for diversification. The same reason it makes sense to buy ETFs versus directly balance your own portfolio for anything below your first million.

But owning a REIT is nothing like owning property. Sure, REITs and investment properties both derive cash flows from rent, but the similarities stop there.

Owning fractional shares in property is also nothing like owning property. You’re not going anywhere profound with this line of argument.

Really? Most people own fractional shares of real estate, e.g. when the property is part of a marital estate.

Investing in a REIT is just investing in a company that happens to derive cash flows from real estate. The only difference is that you have to pay income tax on your dividends. Owning a fractional share of a property is taking an ownership stake in a real asset. The two aren’t related at all.

Why do you keep saying "fractional share"? All shares are fractions. You sound like a moron.

Typically, fractional ownership of real estate assets is typically done via a tenancy in common title, not via a share mechanism, so your “share” (literally “portion”, which can be partial or whole) is a fraction of the whole. How about learn the basics before giving financial advice and calling names.

> When disagreeing, please reply to the argument instead of calling names. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."

https://news.ycombinator.com/newsguidelines.html

Because a REIT gives you a fractional share of hundreds of properties.

You wanted to sound smart, ended up sounding like a moron.

REITs don't pay capital gains the way you and I would if we bought a house together.

If you and I bought a house together, no capital gains would be "paid". We would own an asset, which could go up in value and we could sell. Exactly the same with REITs.

This is, of course, incorrect. If you and I bought a house together, took ownership, enjoyed appreciation, and consummated a sale, and realized income, we would owe capital gains tax on the income.

There are some ways we could avoid some or all of it, but I was not considering a situation where you and I shared a primary residence, because we’d spend too much time arguing about taxation basics.

On the other hand, a REIT with more than the required number of members that distributes the required share of profits will pay no income taxes. Investors in the REIT, on the other hand, pay taxes on the dividends.

One little known fact about REITs is that the capital gains are taxed as income not as capital gains. On the other hand, you can use depreciation and a 1031 exchange to avoid paying any taxes on real estate you own / sell.