Reading 34: Alternative Investm....olio Management－LOS g

Direct equity real estate investing has the following advantages: many expenses are tax deductible, the ability to use more leverage than other investments, having more control, and the ability to diversify geographically. Higher information costs are a disadvantage to direct real estate investing.

Direct equity real estate investing has the following disadvantages: lack of divisibility means a single investment may be a large part of the investors portfolio. There are high information cost, high commissions, high operating and maintenance costs, and hands-on management requirements. There are special geographical risks like neighborhood deterioration and the political risk of changing tax codes.

Lower volatility is the correct answer. The average return has actually been lower than those of stocks over the long-term.