Explanation

Correct Answer: B

Direct ownership of real estate requires extensive time and effort for property management, including maintenance, tenant relations, repairs, and administrative tasks. This is one of the key disadvantages of direct real estate ownership compared to indirect real estate investments like REITs.

Analysis of Other Options:

A. Investors have no control over the tenant mix - This is incorrect. Direct ownership gives investors significant control over tenant selection, lease terms, and property management decisions.

C. Non-cash property depreciation expenses cannot be used to reduce taxable income - This is incorrect. Depreciation is a non-cash expense that can be used to reduce taxable income from real estate investments, which is one of the tax advantages of real estate ownership.

Key Points:

• Direct real estate ownership provides control but requires active management
• Depreciation is a valuable tax benefit for real estate investors
• Direct ownership involves illiquidity, high transaction costs, and management responsibilities
• This question tests understanding of the practical aspects of direct real estate investment versus indirect methods