Private Real Estate vs REITs: Which Is Better?

REIT or private

Is private real estate better than a REIT?

Neither private real estate nor a REIT is better for every investor. In the REIT vs real estate decision, a listed REIT trades like a stock and can be sold any trading day. Private real estate, including a non-traded REIT or a syndication, locks money up for years. In exchange, you get more say over what you own and, in a partnership, tax deductions that flow to you.

The choice turns on how soon you might need the money and whether you want to pick the property and sponsor. Relli co-founder and CEO Mor Milo describes what you give up with a REIT:

"You don't really have a say on: do I put it in multi-family, do I choose sponsor A or sponsor B, do I go put it in a self-storage deal, do I put it in debt? They kind of do everything for you."

Mor Milo, Relli co-founder and CEO, in How to Access Private Real Estate Deals Without Being Rich (June 24, 2026)

What is the difference between a REIT and private real estate?

A real estate investment trust (REIT) is a company that owns or finances property, while private real estate is held through private partnerships. A REIT must distribute at least 90% of its taxable income to shareholders. The private partnerships, such as syndications and private funds, do not trade on an exchange. REITs come in three regulatory types, which is where most of the confusion starts.

Unlisted REITs

What is a non-traded REIT?

A non-traded REIT is a REIT sold to the public but not listed on a stock exchange. It is registered with the Securities and Exchange Commission (SEC), and you rely on the REIT's repurchase plan to get money out.

The SEC warns that a liquidity event "might not occur until more than 10 years after your investment." It also warns that repurchase programs "may be discontinued ... without notice." Commissions and upfront fees have usually totaled about 9% to 10% of the offering price and can reach 15%, according to the SEC.

Blackstone Real Estate Income Trust (BREIT) shows how the limits work. Its prospectus supplement dated April 22, 2026, caps repurchases at 2% of net asset value (NAV) a month and 5% a quarter. The supplement lets the board buy back "only some, or even none." Shares held less than a year are bought back at 98% of NAV.

When requests surged from November 2022, BREIT prorated repurchases through 2023 before meeting them in full in 2024, according to Reuters and Bisnow.

Limits can also tighten. On April 29, 2026, Starwood Real Estate Income Trust stopped accepting most repurchase requests and cut its distribution, according to its SEC filings. The exceptions are requests after a death or qualifying disability, and accounts under $5,000.

What is a private REIT, and how is it different from a public REIT?

A private REIT is a REIT sold through a private placement, so it is neither registered with the SEC nor traded on an exchange. Private REITs are "primarily sold to institutional or accredited investors," in the words of the Financial Industry Regulatory Authority (FINRA). A public REIT, listed or non-traded, files with the SEC and can be sold to the general public.

Private REITs file Form D like other private offerings. Relli's analysis of SEC data covered 4,172 new real estate Form D filings from October 2025 to September 2026. REIT and real estate finance offerings made up 191 of them, with a median stated minimum of $17,500 among those listing one.

The same data showed 553 tiny REIT preferred-share offerings of $250,000 or less. Fund sponsors use them to meet the rule that a REIT have at least 100 shareholders. FINRA's guidance ends bluntly: "REIT fraud is real." Check an unlisted REIT's sponsor the way you would vet a syndication sponsor.

Returns history

How have REITs performed compared with private real estate?

Listed REITs earned more than private real estate after fees in a large study of U.S. pension plans, but with bigger visible price swings. Private real estate looks steadier mainly because it is valued by periodic appraisals rather than daily trades.

Fees explain part of the gap: in the CEM data, outside private funds trailed REITs while internally managed property roughly matched them. Measurement explains the rest: adjusted for appraisal lag, the two moved closely together, with a 0.90 correlation.

These are institutional averages, not any single deal's result, and past results do not predict future ones. The guide to real estate vs stocks puts both next to the stock market.

Getting out

How easy is it to sell a REIT compared with private real estate?

A listed REIT is the easiest real estate investment to sell, since shares trade on an exchange every market day. Every other option depends on a plan, a sponsor or a sale. From most to least liquid:

1. Listed REIT: sell at the market price, which may be below what you paid.
2. Interval fund or non-traded REIT: periodic repurchase offers, capped and prorated when demand is high. Interval funds must offer every 3, 6 or 12 months to buy back 5% to 25% of shares.
3. Open-end private fund: redemption requests can wait in a queue.
4. Closed-end fund or syndication: usually no exit until the property sells, commonly 3 to 7 years. Regulation D securities are restricted, generally for at least a year under SEC Rule 144 when the issuer does not file SEC reports. The operating agreement can also block transfers.

Where a sale to another investor is allowed, buyers usually demand a discount. See how secondary sales of private real estate work.

Taxes compared

How are REITs and private real estate taxed differently?

REIT dividends arrive on Form 1099-DIV, while a syndication passes income, losses and depreciation through to you on a Schedule K-1. Most REIT dividends are taxed as ordinary income with a 20% deduction. The K-1 often shelters part of the cash you receive until the property is sold.

Timing differs too: a partnership on extension can lawfully send its K-1 as late as mid-September. Passive losses on a K-1 generally offset only passive income. The K-1 guide explains both. Retirees weighing the two as income can use the guide to retirement income from REITs, syndications and bonds.

Syndication vs REIT

Is a real estate syndication better than a REIT?

A real estate syndication beats a REIT only for investors who want to pick the property and sponsor, can commit more and can wait. For most other investors, a REIT's liquidity and spread matter more.

• Choice: in a syndication you choose the building, the business plan and the sponsor; in a REIT the manager chooses.
• Concentration: a syndication is usually one property and one loan. A large REIT spreads across thousands of buildings, as Realty Income did with 15,588 properties at June 30, 2026.
• Check size: a listed REIT costs one share at the market price, while the median stated minimum on real estate Form D filings was $50,000.
• Fees: a REIT's costs sit inside the company; a syndication lists its acquisition fee, asset management fee and promote in its documents.

Sector guides compare private deals with the listed REITs in each property type, from self-storage REITs and data center REITs to net lease REITs such as Realty Income. Relli lists private offerings from sponsors it has reviewed and underwritten, not listed REITs. Most are for accredited investors, and minimums, set by each sponsor, have started from $25,000. The funds vs syndications guide covers the private side.

Is a REIT an alternative investment?

A REIT can be a stock-like investment or an alternative investment, depending on the type. A listed REIT behaves like a stock: it trades on an exchange, is "typically a liquid investment" and is sensitive to interest rates, according to the SEC. Non-traded and private REITs behave more like alternative investments, with no daily market, limited exits and values set by the manager or appraisers.

Before you buy

What should you check before buying a non-traded REIT or a private deal?

Six checks, drawn from SEC and FINRA investor guidance, cover most of the risk:

• Upfront costs: commissions and offering fees, which the SEC says have usually run 9% to 10% for non-traded REITs.
• Where distributions come from: the SEC warns non-traded REITs may pay them from offering proceeds and borrowings, not only property income.
• The exit: repurchase limits, and how the board used them from 2022 to 2026.
• How value is set: some non-traded REITs do not estimate a value per share until 18 months after the offering closes.
• The sponsor: background, past results and fees, checked against public records.
• Your timeline: if you may need the money within a few years, a listed REIT is the only option here built for that.