What are the key differences between REITs (Real Estate Investment Trusts) and direct property ownership from an investor's perspective?

Publicly traded REITs offer daily liquidity (you can buy and sell shares on a stock exchange), diversification across many properties and markets, and truly passive income, but REIT dividends are mostly taxed as ordinary income and individual investors cannot use the property's depreciation to offset their other income. Direct ownership provides the powerful tax shield of depreciation, the ability to use leverage to magnify returns, and control over property improvements and rent increases, but it is illiquid, management-intensive, and requires substantially more capital. Some investors use both: REITs for liquidity and diversification, and direct properties for tax benefits and active value creation.