Which of the following is a drawback of direct real estate investments?

Direct real estate investments can often involve large lot sizes, which can be a significant drawback. When an investor wishes to enter or exit the real estate market, they may find it challenging to purchase or sell properties, particularly if they require a significant capital outlay or if the properties are not easily divisible. This can limit investment flexibility and the ability to adjust real estate holdings in response to changing market conditions.

In contrast, high liquidity typically pertains to the ease of converting an asset into cash without significantly affecting its market price, which is generally not a characteristic of direct real estate. Similarly, minimal transaction costs and high information transparency are often advantages associated with direct real estate investments. Therefore, while direct real estate can offer various benefits, the large lot sizes can restrict potential investors and affect overall portfolio management.