Tax liens vs. REITs, which actually performs better for a passive income investor?

the comparison comes up a lot and i think it gets framed wrong most of the time.

people compare the return numbers in isolation, statutory tax lien rates vs. REIT dividend yields, and conclude that tax liens win on paper. that might be true on headline numbers but it ignores what you're actually doing differently with each.

a REIT is liquid, diversified by default, professionally managed, and available inside a retirement account. you can put $500 in today without researching a single property. the tradeoff is that you own a slice of someone else's portfolio and you're exposed to the same dynamics as the broader real estate sector.

a tax lien is illiquid, requires per-property due diligence, and puts your return entirely on the outcome of one specific county's enforcement process. the rate is fixed by statute, the principal is property-secured, and it's completely uncorrelated with equity markets. but you're doing the work, and if you skip that work the fixed rate doesn't save you.

they're not really comparable as products, they serve different investors at different portfolio stages.

my honest take: REITs make sense when you want real estate exposure without doing anything. tax liens make sense when you have the time and appetite to do the research yourself and you want fixed-rate income on capital you don't need liquid.

most passive income investors i've seen start with REITs and move toward tax liens as their capital grows and they have more bandwidth.

what's your current split, and what drove that decision?