A Real Estate Investment Trust (“REIT”) is a company that owns, and in most cases operates commercial real estate. A REIT must distribute 90% of its income as dividends to shareholders, and 75% of its income must come from gross income from rent, mortgage interest or sale of property. As a shareholder in a REIT, you are responsible for the taxes paid on the dividends distributed to you. The REIT charges a management fee typically in the range of 1% - 2% of property value on a yearly basis, and you do not have a say in the properties selected, operational decisions, or any other matters. When purchasing a share in the REIT, you are at the whim of the public markets and the fund managers. The purpose of the company might be guided towards real estate, but it is not real estate investing.
When you invest in real estate with mogul, you can build your portfolio through vetted properties. You actually own the real estate and receive the true benefits.When you receive the monthly income (REITs distribute quarterly), you receive the tax benefits of real estate. For example, if you receive an 8% dividend from a REIT, the 8% becomes 5% after taxes; whereas, if you receive an 8% dividend from a mogul property, that 8% will benefit from the depreciation tax shield and will remain 8%. In some cases on top of the 8%, you will appear to have lost money on your tax returns, even as the 8% sits in your bank account. We do not charge an asset management fee, instead to align incentives, we do charge a 2.5% of rental income fee (similar to a property manager and much lower than % of property charged in a REIT). When you invest in real estate with mogul, you are investing in real estate.