This Private REIT Is Unaffected By The Stock Market

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Real estate investment trusts offer a simple way for retail investors to get into real estate investing. While many people are familiar with the publicly traded REITs that can be bought on the major stock exchanges, few know about the opportunities with private REITs. 

What's A Private REIT?

A private REIT essentially operates the same as a public REIT and has the same set of rules to follow, such as paying out at least 90% of its taxable income to shareholders as dividends. 

The major differences are that private REITs aren’t listed on a public exchange and aren’t subject to the same regulatory requirements as publicly traded companies. 

DiversyFund Growth REIT

The DiversyFund Growth REIT has one of the lowest minimum investments among private REITs, at only $500, and is available to non-accredited investors. The company invests in value-add multifamily real estate and pays monthly dividends, which are reinvested to provide additional long-term growth on your investment. 

The company’s strategy involves acquiring multifamily properties that have a high potential for increasing rents then renovating these properties to maximize the cash flow. More cash flow means higher property values, which results in higher dividends and increased value for shareholders. 

While the stock market can be unpredictable, shares in the DiversyFund Growth REIT are directly tied to the increasing value of multifamily real estate. 

View DiversyFund’s offering

Why Invest in a Private REIT 

There are two major benefits to investing in private REITs. 

First, there’s little to no correlation between the value of a share in a private REIT and the stock market. The share price is tied directly to the value of the REIT’s assets, so growth is more consistent and predictable. 

The other major benefit is that private REITs often provide higher dividends. Since these REITs don’t have to comply with the same regular financial reporting and corporate governance rules as publicly traded REITs, they’re able to save a significant amount of money, which can result in higher returns. 

The Drawback To Private REITs

There are pros and cons to every type of investment and private REITs are no exception. The downside to private REITs is that they’re typically an illiquid investment. While you can easily sell your shares in a publicly traded REIT at almost any time, there are limited options for selling shares of a private REIT on a secondary market. 

As mentioned above, private REITs aren’t regulated as heavily as publicly traded companies. While SEC compliance is a significant expense, the regulations are put in place to protect investors and provide more transparency. This means investors should be extra thorough in their due diligence when choosing a private REIT and understand the additional risks involved. 

Which Is The Better Investment?

It’s impossible to say whether one type of REIT is a better investment than the other. The decision to invest in a private REIT vs a publicly traded REIT is a matter of long-term investment goals and risk tolerance. If you intend to invest long-term and are comfortable with the regulations, then private REITs are worth taking a look at. 

See also: DiversyFund Review

Photo: Pierre Châtel-Innocenti on Unsplash.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.