Best Private REITs

Read our Advertiser Disclosure.
Megan Brown
Contributor, Benzinga
July 23, 2024

Private REITs are typically open only to accredited or high-net-worth investors, and they invest in a diverse range of real estate assets such as commercial properties, multifamily buildings, and development projects. Investing in private REITs can be a strategic way to diversify a real estate portfolio and potentially generate attractive risk-adjusted returns for sophisticated investors.

One of the main advantages of investing in private REITs is the potential for higher returns compared to publicly traded REITs. However, investors should conduct thorough due diligence on the private REIT sponsor, management team, and investment strategy before committing capital.

Table of Contents

What is a Private REIT?

REITs are private equity firms that own, manage and maintain income-producing real estate. The company then rents to tenants, hoping to create a track record of rental income. With REITs, investors have the opportunity to invest in the real estate sector without having to own real property. The main difference between public and private REITs is that public REITs are traded on a national stock exchange and regulated by the Securities and Exchange Commission (SEC) and private REITs are not as real estate investing opportunities vary depending on the structure of the company.

As a result of not being traded in the stock exchange, share prices with private REITs tend to be unaffected by stock market highs and lows. They are, however, meant to be long-term investments of 5 years or more in order to see the best returns. You’re not looking for market movers here. You’re trying to decide if you want to buy into shopping centers, large shopping malls or local retail centers, a data center, office buildings, mortgages, etc.

Benefits of Investing in a Private REIT

Growing and diversifying your portfolio is easy with private REITs. You can diversify your portfolio with little to no volatility. And, not being registered with the SEC means that there are fewer costs associated with your investment, such as operating costs or brokerage costs. This inevitably leads to a better potential for higher returns — private REITS are able to consistently pay out greater dividends than public REITs.

In addition, REITs are subject to fewer taxes than other forms of investments. You are even able to deduct up to 20% of the qualifying profits that contribute to your gross income from REIT investing.

Why Not Buy Into Traditional Real Estate?

Many investors have said goodbye to investing in traditional real estate. With the amount of work and maintenance, not to mention the upfront costs, interest rates, cash flow issues, etc. that come with investing in the traditional real estate market, investors are looking to invest smarter. Instead of owning and managing real property, you can so easily buy into a company that does all the hard work for you.

With REITs, you invest in the company that is taking care of the real estate — owning, managing and renting it out. You might try a:

This takes you out of the equation in terms of the headache that goes along with owning real estate. Instead, you get to collect the profits through your financial investment and simplify the process.

Benzinga’s Best Private REIT

Benzinga's choice for the best private REIT for investors is Streitwise. Let’s dive right in and see what this real estate investing platform is all about.

Streitwise

Streitwise is an easy-to-use tech company with a low initial investment that you can get started with almost immediately. Although there is a $5,000 buy-in, there’s also potential for higher returns here. Specializing in the commercial real estate market, Streitwise has had an impressive start in the industry over the last few years and is swiftly heading in the right direction as a successful company. It offers a blog to keep its investors up-to-date on happenings, an iOS app to monitor your investment, as well as a 24/7 online chat and an investor center to organize your account details and information on its platform.

Pros

  • Being in the commercial real estate market, Streitwise focuses its business on growing and expanding in hot markets and up-and-coming locations where it can purchase properties at lower prices.
  • Investors are partial owners in the properties — with low risk and high returns. Its initial investment and fees are transparent and considered low by industry standards.
  • While $5,000 is the minimum initial investment, Streitwise gives its sponsors a one-time fee of 3% and charges a management fee of just 2% annually.
  • There are no other hidden fees or costs associated with your investment. 

Cons

  • Streitwise currently only has 2 properties in its portfolio, which doesn't offer as much diversification as some investors like to see.
  • With the age of the business and the limited portfolio, this is a con that many newer companies face. While its start has been great, there is no promise for its future, just the potential for great advances.

Overall, Streitwise is an excellent platform for investors looking to get into the commercial real estate market and take a chance on an expanding company. Growing with a company like this could help your investments take off at surprising speeds and offer impressive dividends. Long-term investors looking to invest at a lower risk than with traditional commercial real estate paths should consider Streitwise for their portfolio diversity.

An investment platform like this stands out because of the potential earnings and opportunities that are associated with it. Jumping into a smaller REIT has its risks, but many times have greater rewards.

More Real Estate Investments Curated by Benzinga

Becoming more familiar with real estate investing and its benefits will lead any investor to want to explore even more options. Here is a list of additional great investment opportunities to check out:

Introducing yourself to the popular wealth-building world of real estate investment has never been easier. You can take charge of your money and finally put it where it makes sense. In these real estate investment platforms, you are able to invest your money with little to no effort on your part. Have trusted financial experts look after your investments and make the tough decisions for you. Building wealth through real estate investments isn’t just for accredited investors anymore — it’s for everyone.

Frequently Asked Questions

Q

Is a private REIT a good investment?

A
Private REITs are quality investment opportunities. They aim for long-term appreciation as well as higher returns. The ease of use and lower initial investment requirements that these platforms offer allow anyone to begin investing and making profits.
Q

What are the largest private REITs?

A
One of the largest private REITs is Blackstone Real Estate Income Trust (BREIT), managed by the global investment firm Blackstone. BREIT focuses on investing in a diversified portfolio of real estate assets, including office buildings, residential properties, and industrial facilities. Another notable private REIT is Starwood Capital Global Hospitality REIT, which specializes in acquiring and managing hospitality properties such as hotels and resorts.
Q

Can a REIT go private?

A

Yes, a REIT can go private. Instances, where a REIT may consider going private, include delisting its shares from the stock exchange and becoming a privately held entity. Going private can also provide a REIT with more flexibility and autonomy in decision-making and operations, as it no longer has to adhere to strict regulatory requirements and disclosure obligations of being a publicly traded company.