Can there be private REITs?

Yes, private REITs are allowed, but generally must restrict investment to accredited and institutional investors, so they're exempt from SEC registration and disclosure requirements.

Can private REITs be a good fit for retirement portfolios?

Some retirees may find private REITs to be good investment choices, especially if they are accredited investors. Private REITs tend to pay higher dividends than publicly traded REITs. As long as the general lack of liquidity isn't a major concern, private REITs could be attractive to retirees.

Who can invest in private REITs?

Private REITs can generally be sold only to institutional and accredited individual investors. An accredited investor is one who has either $1 million in net worth, excluding their primary residence, or income over $200,000 for the preceding two-year period ($300,000 for married couples).

What is the average return on a private REIT?

According to a CEM Benchmarking study, private REITs returned an average of 7.66% annually during the 25-year period from 1998 through 2022. This was significantly less than the 9.7% average return from publicly traded REITs.

How much does a private REIT cost?

Fees and commissions charged by private REITs can vary dramatically, but they are important to know about. Be sure to read a private REIT's prospectus thoroughly before investing.

Are private REITs regulated?

Private REITs are not SEC-regulated like their public counterparts are. They are exempt because they are limited to accredited and institutional investors. However, private REITs must comply with the IRS definition of a REIT and, in some areas, follow state-level securities laws.

How liquid are private REIT investments?

Private REITs are relatively illiquid investments. They don't trade on any regulated exchange, and there is no secondary market for shares. Investors often have lock-up periods that can last several years and, even outside a lock-up, can redeem shares only at certain times, such as during an annual redemption window. Every private REIT has its own policies, so the liquidity of any specific REIT can vary.

A Beginner's Guide to Private REITs

Private REITs: Benefits, Risks, and Investment Insights

By Matthew Frankel, CFP – Updated Sep 10, 2026 at 10:17 AM EST | Fact-checked by Frank Bass

Key Points

Private REITs offer high dividends but are only available to accredited investors.
Despite lower compliance costs, private REITs lack liquidity and transparent pricing.
Private REITs, unlike public ones, aren't regulated by the SEC and pose higher risks.

Private REITs are real estate investment trusts open only to certain investors and that don't trade on major stock exchanges.

Most investors buy shares of their real estate investment trusts, or REITs (pronounced "reets"), on public stock markets like the New York Stock Exchange (NYSE) and the Nasdaq stock exchange. However, not all REITs are publicly traded. In fact, some public REITs are not traded on major exchanges, and some private REITs are open only to accredited investors and subject to few regulatory requirements.

Private REITs can be attractive for a few reasons. For one thing, private REITs sometimes offer superior dividend yields to their publicly traded counterparts. Plus, their lower compliance costs could lead to a better cost structure for their business. However, there are several drawbacks to consider before you invest in a private REIT.

How private REITs work

Private REITs are real estate investment trusts that meet a few specific criteria.

They are not listed on major stock exchanges.
They are not liquid and typically only allow investors to cash out at certain times.
They are not open to all investors. Private REITs are generally limited to accredited and institutional investors.

As a result, private REITs don't have the same disclosure requirements as their publicly traded counterparts.

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Types of REITs

Before we get into the pros and cons of private REITs, it's important to clarify that there are three types of REITs:

Publicly traded REITs are REITs that trade on major stock exchanges like the NYSE and Nasdaq. Mall REIT Simon Property Group (SPG +0.08%), logistics REIT Prologis (PLD +1.00%), and self-storage REIT Public Storage (PSA +0.65%) are some popular examples of publicly traded REITs. These companies trade just like ordinary stocks and are subject to the same regulatory compliance regulations.
Public non-listed REITs are available for investment to all U.S. investors, but their shares aren't listed on a major exchange. These REITs combine features of publicly traded REITs and private REITs. For example, they are generally illiquid (meaning their shares can't be readily traded), but they are subject to the same regulatory and investor-protection requirements as exchange-listed REITs.
Finally, private REITs are real estate investment trusts that are not listed on a major exchange and are not subject to most U.S. Securities and Exchange Commission (SEC) regulatory requirements. The most important thing to know about private REITs is that they are not available to all investors. They are generally sold by brokers and are marketed to accredited and institutional investors.

Advantages of private REITs

While private REITs certainly aren't great investment choices for everyone, as we'll get into in the next section, there are several reasons why they could be attractive to investors:

High dividend yields. On average, private REITs pay higher dividends than comparable public REITs. Public REITs have historically paid dividend yields in the 4% to 6% range, while private REITs' dividend yields have historically been in the 7% to 8% ballpark, according to National Real Estate Investor.
No daily market fluctuations. Most private REITs only calculate their share prices quarterly, so investors don't need to worry about daily market fluctuations.
Low compliance costs. Private REITs can save significant money in this area and can (theoretically) generate superior risk-adjusted returns when compared with their publicly traded counterparts.

Potential drawbacks of private REIT investing

With these advantages in mind, it's important to mention that there are several important disadvantages to investing in private REITs.

Before you consider investing in a private REIT, here are some of the potential drawbacks you need to be familiar with:

Lack of transparency. Private REITs are not subject to the same regulatory scrutiny as public REITs. In fact, they are exempt from SEC registration. As we saw in the last section, this can be both a benefit and a drawback. For example, conflicts of interest don't need to be disclosed by private REIT sponsors.
Accredited investors only. Because of the increased risks, the potential for investor abuse, and the lack of a liquid market, private REITs are available only to accredited investors. This generally means they're restricted to institutional investors or individuals with at least $1 million in assets or an annual income of at least $200,000 ($300,000 for married couples).
Lack of liquidity. Once you invest in a private REIT, it can be difficult to cash out in a timely manner. Publicly traded REITs allow you to sell shares instantly whenever the market is open, but the same isn't true for private REITs. Each private REIT has its own rules for redeeming shares.
High commissions (usually). Private REITs are often sold to investors by brokers, so a substantial portion of your private REIT investment could go toward commissions. In fact, there are reports of private REITs that pay as much as 12% in marketing fees and commissions.
High minimum investments. Private REITs typically require minimum investments ranging from $1,000 to $25,000 (or more in some cases). On the other hand, you can invest in a publicly traded REIT for the cost of one share, or even less if your broker allows fractional share trading.

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Tax considerations for private REITs

Private REITs generally get the same tax treatment as publicly traded REITs. This means that the dividends you receive can be a bit complex.

REIT dividends are broken into three categories:

Ordinary Income: This is what most REIT dividends are. Because REITs receive favorable tax treatment (no corporate tax), dividends are treated as ordinary income for recipients.
Capital gains: This occurs when a REIT sells a property at a profit. Capital gains from REITs are taxed at the lower qualified dividend rates.
Return of capital: In some cases, a portion of a REIT's dividend can be considered a return of capital and not be taxed at all.

Soon after the end of each calendar year, a private REIT will issue a Form 1099-DIV that details the treatment of dividends it paid over the past year. It's also important to keep in mind that under current tax law, the portion treated as ordinary income can be used to claim the "pass-through" income tax deduction, which, for most taxpayers, allows 20% of these dividends to be deducted.

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Are private REITs right for you?

Here's my two cents on private REITs: In most cases, the drawbacks of private REIT investing outweigh the potential benefits.

I've evaluated many private REITs, and I'd estimate that at least 90% charge commissions and fees that I consider excessive. This is especially true when there are excellent publicly traded alternatives. Plus, it's tough to find an investment strategy or potential return that justifies the lack of transparency and liquidity.

It's important to acknowledge that not all private REITs are inferior investments to their public counterparts, and many investors don't mind the lack of liquidity.

If you find a private REIT opportunity that looks interesting, it's important to read the investment's prospectus thoroughly. Also, check out the background of the REIT's management team and other key factors.

In short, when it comes to private REIT investing, the SEC and other regulatory agencies aren't going to have your back, so you'll need to protect yourself. If you have the time, knowledge, and desire to thoroughly evaluate private REIT investment opportunities on your own, it's entirely possible to find a diamond in the rough.

If you don't, you're probably better off sticking with publicly traded REITs, which have high dividends and growth potential without the additional headaches. There are dozens of excellent publicly traded REITs with strong track records of growing dividends and delivering solid returns, and for most investors, these are the best way to go.

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Private REITs FAQ

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About the Author

Matt Frankel, CFP®, is a contributing Motley Fool stock market analyst specializing in the real estate and financial sectors. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, Globe St, The National Desk, and other TV networks and publications for his real estate, financial, stock market, and investing expertise.

TMFMattFrankel

@MattFrankelUSC

Matt Frankel, CFP has positions in Prologis, Public Storage, and Simon Property Group. The Motley Fool has positions in and recommends Prologis and Simon Property Group. The Motley Fool has a disclosure policy.

Publicly traded REITs are REITs that trade on major stock exchanges like the NYSE and Nasdaq. Mall REIT Simon Property Group (SPG +0.08%), logistics REIT Prologis (PLD +1.00%), and self-storage REIT Public Storage (PSA +0.65%) are some popular examples of publicly traded REITs. These companies trade just like ordinary stocks and are subject to the same regulatory compliance regulations.

Public non-listed REITs are available for investment to all U.S. investors, but their shares aren't listed on a major exchange. These REITs combine features of publicly traded REITs and private REITs. For example, they are generally illiquid (meaning their shares can't be readily traded), but they are subject to the same regulatory and investor-protection requirements as exchange-listed REITs.

Finally, private REITs are real estate investment trusts that are not listed on a major exchange and are not subject to most U.S. Securities and Exchange Commission (SEC) regulatory requirements. The most important thing to know about private REITs is that they are not available to all investors. They are generally sold by brokers and are marketed to accredited and institutional investors.

Advantages of private REITs

While private REITs certainly aren't great investment choices for everyone, as we'll get into in the next section, there are several reasons why they could be attractive to investors:

High dividend yields. On average, private REITs pay higher dividends than comparable public REITs. Public REITs have historically paid dividend yields in the 4% to 6% range, while private REITs' dividend yields have historically been in the 7% to 8% ballpark, according to National Real Estate Investor.

No daily market fluctuations. Most private REITs only calculate their share prices quarterly, so investors don't need to worry about daily market fluctuations.

Low compliance costs. Private REITs can save significant money in this area and can (theoretically) generate superior risk-adjusted returns when compared with their publicly traded counterparts.

Potential drawbacks of private REIT investing

With these advantages in mind, it's important to mention that there are several important disadvantages to investing in private REITs.

Before you consider investing in a private REIT, here are some of the potential drawbacks you need to be familiar with:

Lack of transparency. Private REITs are not subject to the same regulatory scrutiny as public REITs. In fact, they are exempt from SEC registration. As we saw in the last section, this can be both a benefit and a drawback. For example, conflicts of interest don't need to be disclosed by private REIT sponsors.

Accredited investors only. Because of the increased risks, the potential for investor abuse, and the lack of a liquid market, private REITs are available only to accredited investors. This generally means they're restricted to institutional investors or individuals with at least $1 million in assets or an annual income of at least $200,000 ($300,000 for married couples).

Lack of liquidity. Once you invest in a private REIT, it can be difficult to cash out in a timely manner. Publicly traded REITs allow you to sell shares instantly whenever the market is open, but the same isn't true for private REITs. Each private REIT has its own rules for redeeming shares.

High commissions (usually). Private REITs are often sold to investors by brokers, so a substantial portion of your private REIT investment could go toward commissions. In fact, there are reports of private REITs that pay as much as 12% in marketing fees and commissions.

High minimum investments. Private REITs typically require minimum investments ranging from $1,000 to $25,000 (or more in some cases). On the other hand, you can invest in a publicly traded REIT for the cost of one share, or even less if your broker allows fractional share trading.

Private REITs: Benefits, Risks, and Investment Insights

Key Points

How private REITs work

Types of REITs

Advantages of private REITs

Potential drawbacks of private REIT investing

Tax considerations for private REITs

Are private REITs right for you?

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Private REITs FAQ

Can there be private REITs?

Can there be private REITs?

Can private REITs be a good fit for retirement portfolios?

Can private REITs be a good fit for retirement portfolios?

Who can invest in private REITs?

Who can invest in private REITs?

What is the average return on a private REIT?

What is the average return on a private REIT?

How much does a private REIT cost?

How much does a private REIT cost?

Are private REITs regulated?

Are private REITs regulated?

How liquid are private REIT investments?

How liquid are private REIT investments?

About the Author

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Private REITs FAQ

Can there be private REITs?

Can there be private REITs?

Can private REITs be a good fit for retirement portfolios?

Can private REITs be a good fit for retirement portfolios?

Who can invest in private REITs?

Who can invest in private REITs?

What is the average return on a private REIT?

What is the average return on a private REIT?

How much does a private REIT cost?

How much does a private REIT cost?

Are private REITs regulated?

Are private REITs regulated?

How liquid are private REIT investments?

How liquid are private REIT investments?

Types of REITs

Advantages of private REITs

Potential drawbacks of private REIT investing