The post Best Private REITs by Megan Brown appeared first on Benzinga. Visit Benzinga to get more great content like this.
Real estate investment trusts (REITs) can be either private or public investment opportunities. Investing in a private or public REIT is each investor’s personal choice, as there are benefits to each. However, here we will look at the 2 best private REITs and how they can make you better profits, a better portfolio, and why they are overall a better investment for you and your future. Plus, you can diversify your investments portfolio with these assets.
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Table of contents
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- What is a Private REIT?
- Benefits of Investing in a Private REIT
- Why Not Buy Into Traditional Real Estate?
- Benzinga’s Best Private REITs
- More Real Estate Investments Curated by Benzinga
- Frequently Asked Questions
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:
- Mortgage REIT
- Equity REIT
- Healthcare REIT
- Office REIT
- Retail REIT
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 REITs
The top 2 best private REITs for investors are Streitwise and RealtyMogul. Which one is best for you depends on your goals and your investment potential. Let’s dive right in and see what platform works best for you.
Streitwise
Get started
securely through Streitwise’s
website
Streitwise is a unique online real estate investing platform that was designed to give investors, both big and small, an equal opportunity to invest in real estate. At its core, Streitwise is a real estate investment trust, but it’s one of the few online real estate investing platforms that is available to non-accredited investors.
Best For
- Investors looking to diversify
- Investors with less than $200k in annual income
- Passive traders
- Consistent quarterly dividends
- Low, transparent fees
- Low investment minimum
- Convenient and easy to use
- Limited offerings
Streitwise is another 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.
RealtyMogul
get started
securely through RealtyMogul’s
website
This unique online platform enables investors to handle the entire commercial real estate investing process right from their RealtyMogul dashboard. With rigorously vetted property listings, expertly managed REITs, and a commitment to providing top-notch service and support to its members, RealtyMogul makes commercial real estate accessible to everyday investors.
Best For
- Newer accredited investors who want access to pre-vetted properties
- Non-accredited investors seeking consistent cash flow from well-managed REITs
- Experienced real estate investors who want access to deal-specific information that allows them to perform their own due diligence more easily.
- Do everything from finding the investment property through to signing the legal documents and monitoring your portfolio, all in one platform.
- All properties are pre-vetted through RealtyMogul’s transparent and rigorous due diligence process.
- Investment minimums as low as $5,000
- Keep track of investments with regular updates posted directly to your dashboard
- Automated investing
- Individual property marketplace is only open to accredited investors
- Does not offer portfolio management
RealtyMogul is a real estate crowdfunding platform with a variety of available offerings. Two of these offerings are for the company’s non-traded REITs. MogulREIT I is the platform’s income REIT, which is aimed at providing high dividend payouts to investors. The current annualized dividend yield on this REIT is 6%, paid monthly. MogulREIT II is the platform’s growth REIT. It’s aim is to provide higher capital appreciation through its multifamily investments. While the aim of this REIT is growth, it still provides a quarterly dividend with an annualized rate of 4.5%.
Pros
- RealtyMogul is a well-established and experienced real estate investment company.
- The platform has raised capital for over $5.9 billion worth of real estate since inception.
- One of the main advantages of investing in one of RealtyMogul’s REITs is the company’s access to institutional quality deals.
- With a steady flow of deals, the company is able to carefully select the the most opportunistic investments available.
Cons
- The downsides to RealtyMogul’s REIT offerings are the same as any other private or non-traded REITs – investors have limited liquidity options and no control over the properties the REIT invests in.
- However, both of the company’s REIT have share repurchase options after 12 months with the ability to receive 100% of the shares’ net asset value after 3 years, compared to 5 years for Streitwise and DiversyFund.
RealtyMogul also has the largest portfolio out of the REITs listed here. The Income REIT has distributed nearly $30 million to investors while the Growth REIT has distributed around $10 back to investors since it’s inception.
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:
Get started
securely through CrowdStreet’s
website
Crowdstreet is an online real estate investment platform that lets investors choose from a wide range of real estate investment offerings to crowdfund. Crowdstreet investors are free to buy into managed funds, individual buildings or even build a bespoke investment portfolio that includes both kinds of deals.
CrowdStreet’s platform has a diverse range of property types, ranging from multifamily to office, industrial, self-storage and others.
Best For
- Accredited investors
- Long-term investors
- Investors looking to diversify from stocks
- User-friendly interface
- Diverse investment offerings
- Great investor resources
- Proven performance history
- Many offerings eligible for inclusion in self-directed IRA
- Accredited investors only
- Most offerings require a $25,000 minimum investment
Get started
securely through FarmTogether’s
website
FarmTogether is a crowdfunding investment platform that allows you to pool money with other investors for agricultural opportunities. FarmTogether does have strict requirements for who can and cannot invest on the platform.
FarmTogether’s platform is new and offers limited educational offerings. It doesn’t currently offer a mobile app, and it requires higher-than-average account minimums. However, as a newer platform, FarmTogether has potential that shouldn’t be ignored, especially if you’re a higher-value investor looking for novel ways to invest directly in farmland real estate.
Best For
- Investors who want to invest in farmland real estate
- Long-term investors who don’t mind investing in illiquid assets
- Investors with a net worth of at least $1 million
- Can invest directly in agricultural real estate
- Can combine your investments with other investors for larger returns
- Offers an easy-to-use platform that’s simple enough for total beginners
- Higher-than-average minimum investments when compared to standard brokerage platforms
- No mobile app currently available
- Educational offerings are limited
get started
securely through Groundfloor’s
website
Groundfloor is open to non-accredited investors and private individuals looking for active real estate alternative investment. Groundfloor has great volume with more than 10 investments.
Individuals with small portfolios will also like the low $10 minimum and 0 investor fees. However, most of the loans are given to house flippers, and there is a risk of borrowers defaulting on their loans.
Best For
- Non-accredited investors: It is a good option for non-accredited investors who want to invest in an individual capacity.
- Private investors with small portfolios: Groundfloor charges a relatively small premium of $10, which private investors with small portfolios find attractive.
- Active-investors: Groundfloor is also ideal for investors who want to actively maintain and control their real estate portfolio.
- Charges the lowest minimums in the industry
- 0 investor fees
- Open to non-accredited investors
- Offers no bankruptcy protection
- High rate of an uncured default
- Many loans are for judicial-only states
Get started
securely through AcreTrader’s
website
AcreTrader is an investing platform that makes it easy to buy shares of U.S. farmland and earn passive income, starting in just minutes online. The platform features actual parcels of farmland where investors can choose offerings to participate in based on their investment preferences.
Farm types range from Midwest Row Crop Farms to California Almond Orchards, but you don’t need to be an agriculture expert to get started. They have a very thorough underwriting process to vet the offerings, and present information in an easy-to-understand offering page on their website where you can get started with as little as $10k and 10 minutes.
Best For
- Investors looking for diversification away from stocks and other traditional assets
- Real estate investors interested in new opportunities
- Accredited investors with multi-year investment horizons
- Real, uncorrelated asset class with a history of consistently strong returns
- Highly qualified team with best-in-class underwriting practices
- The platform has some of the lowest fees that you’ll find in real estate investing
- Investment minimums are typically $10,000+
- Only open to accredited investors at this time
Get started
securely through Yieldstreet’s
website
Yieldstreet is an online investment platform that specializes in alternative investment offerings designed to generate passive income and wealth for investors. The platform offers a 1-stop shop for a range of alternative investments ranging from real estate to structured notes and even art collections.
Best For
- Accredited investors looking to diversify
- Alternative investments to stocks and bonds
- Investors looking for passive income
- Easy-to-use platform
- Carefully selected offerings
- Excellent mobile app
- Full spectrum of alternative offerings
- Options for non-accredited investors
- Majority of investments only open to accredited investors
Get Started
securely through Arrived Homes’s
website
Arrived Homes is a real estate investment platform that focuses on building wealth through investing in rental properties. While most real estate platforms and REITs focus on commercial properties, Arrived Homes focuses on single-family homes as its source of rental income.
This focus on smaller properties allows Arrived Homes to sell ownership shares on individual real estate properties to non-accredited investors with buy-ins as low as $100. Learn more about Arrived Homes with Benzinga’s review.
Best For
- Small- to medium-sized investors
- Investors interested in rental income
- Investors looking to diversify
- Buy-ins as low as $100
- Open to non-accredited investors
- Offers ownership shares in real property (and all the tax benefits)
- Multiple ways to earn dividends (rental income and property appreciation)
- Great way to diversify portfolio
- Open to self-directed individual retirement accounts (IRAs)
- Long hold periods
- No secondary market to liquidate shares
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 looking after your investments and making 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
Are private REITs a good investment?
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.
Answer Link
How many private REITs are there in the U.S.?
At this time, there are a total of about 1,100 REITs — both public and private. About 800 of those are assumed to be private REITs, as they are not registered with the SEC.
Answer Link
What is the difference between a public and a private REIT?
A public REIT is sold on the stock market and the public can buy and sell them while a private REIT is constructed as a limited partnership business.
Answer Link
The post Best Private REITs by Megan Brown appeared first on Benzinga. Visit Benzinga to get more great content like this.