4 ms·

> Pacaso is a property broker that buys single-family homes and sells them to consortiums of buyers. Why not just buy a REIT?

4death4 3y ago
Why not just buy fractional shares of a property?
- drt5b7j 3y ago
  Your comment doesn't really answer my question... you just typed the same observation from the other side. You've added nothing. Zero value.
  - 4death4 3y ago
    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.
- JumpCrisscross 3y ago
  > 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.
  - 4death4 3y ago
    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. In general, asking “why not X instead of Y” without giving reasons why X is preferable over Y is just a waste of everyone’s time.
    - JumpCrisscross 3y ago
      Owning fractional shares in property is also nothing like owning property. You’re not going anywhere profound with this line of argument.
      - 4death4 3y ago
        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. You’re not buying fractional ownership of real estate when investing in a REIT. You’re investing in a management team and a capital allocation strategy. It’s much more similar to a mutual fund or PE fund. The only difference between a normal business and a REIT 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.
        drt5b7j 3y ago
        Why do you keep saying "fractional share"? All shares are fractions. You sound like a moron.
        4death4 3y ago
        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.
        fragmede 3y ago
        > 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 https://news.ycombinator.com/newsguidelines.html
- bandrami 3y ago
  Because a REIT gives you a fractional share of hundreds of properties.
- drt5b7j 3y ago
  [flagged]
- singleshot_ 3y ago
  REITs don't pay capital gains the way you and I would if we bought a house together.
  - drt5b7j 3y ago
    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.
    - singleshot_ 3y ago
      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.
      - 4death4 3y ago
        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.

4death4 3y ago

Why not just buy fractional shares of a property?

drt5b7j 3y ago
Your comment doesn't really answer my question... you just typed the same observation from the other side. You've added nothing. Zero value.
- 4death4 3y ago
  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.
JumpCrisscross 3y ago
> 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.
- 4death4 3y ago
  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. In general, asking “why not X instead of Y” without giving reasons why X is preferable over Y is just a waste of everyone’s time.
  - JumpCrisscross 3y ago
    Owning fractional shares in property is also nothing like owning property. You’re not going anywhere profound with this line of argument.
    - 4death4 3y ago
      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. You’re not buying fractional ownership of real estate when investing in a REIT. You’re investing in a management team and a capital allocation strategy. It’s much more similar to a mutual fund or PE fund. The only difference between a normal business and a REIT 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.
      - drt5b7j 3y ago
        Why do you keep saying "fractional share"? All shares are fractions. You sound like a moron.
        4death4 3y ago
        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.
        fragmede 3y ago
        > 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 https://news.ycombinator.com/newsguidelines.html
bandrami 3y ago
Because a REIT gives you a fractional share of hundreds of properties.
drt5b7j 3y ago
[flagged]
singleshot_ 3y ago
REITs don't pay capital gains the way you and I would if we bought a house together.
- drt5b7j 3y ago
  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.
  - singleshot_ 3y ago
    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.
    - 4death4 3y ago
      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.