Published January 12, 2026
From Landlord to Investor: Is a REIT Your Next Move?
For many property owners in our coastal markets, there comes a tipping point. After years of navigating tenant requests, seasonal maintenance, and the constant hustle of turnover, the "romance" of active management often fades. The priority shifts: it’s no longer just about building equity—it’s about preserving wealth and securing a lifestyle of true passive income.
If you love the stability of real estate but are ready to hang up the keys, a Real Estate Investment Trust (REIT) might be the vehicle for your next chapter.
What is a REIT?
At its core, a REIT is a company that owns, operates, or finances income-producing real estate. Think of it like a mutual fund, but instead of a basket of tech stocks, the fund holds a portfolio of physical assets—ranging from luxury apartments to medical complexes and industrial hubs.
The Strategic Advantages of REITs
- High Liquidity: Unlike a physical beach house that takes months to sell, public REITs trade on major exchanges. You can enter or exit a position with the click of a button.
- Low Barrier to Entry: You don’t need a six-figure down payment. REITs allow you to scale your investment to your specific financial goals.
- Instant Diversification: One share can give you a piece of hundreds of properties across various sectors, protecting you from a downturn in any single local market.
- Reliable Dividends: To maintain their tax status, REITs are legally required to distribute at least 90% of their taxable income to shareholders. For those seeking a "paycheck" in retirement, this is a powerful feature.
Important Trade-offs to Consider
While REITs offer simplicity, they function differently from the physical deeds you may be used to:
- Market Volatility: Since they trade on the stock market, REIT share prices can fluctuate based on daily market sentiment, even if the properties themselves are appreciating.
- Tax Implications: REIT dividends are generally taxed as ordinary income. Unlike physical property, you don’t get the direct benefit of depreciation to offset your gains.
- The 1031 Limitation: Crucially, you cannot use a 1031 Exchange to move proceeds from a property sale into a REIT. If you are looking to defer capital gains tax, other structures, such as a DST (Delaware Statutory Trust), may be more suitable.
Is a REIT Your Best Next Step?
A REIT is often the right fit if you value flexibility and diversification above all else, and you are investing "new" capital rather than trying to defer taxes from a recent sale.
Optimize Your Real Estate Portfolio
Transitioning from active management to passive wealth requires a clear strategy. Whether you are looking to diversify into REITs, explore tax-deferred 1031 options, or list your coastal property for its maximum value, The Windrow Group is here to guide you.
Curious about the current value of your portfolio? Contact The Windrow Group Today for a Confidential Portfolio Consultation
