Difference Between REIT & Real Estate Funds??

REIT vs Real Estate Funds

What the REIT?

Real estate investment trusts, otherwise known as REITs, own $3.5 TRILLION in real estate assets.

But what is a REIT? And how are they different than other real estate funds??

Real estate investment trusts are public companies that own and operate income-producing real estate properties.

The catch: REITs don’t do this to develop and resell the real estate…they add these assets to a large portfolio of investments. Then they give individual investors opportunities to invest, kind of like stock.

One thing that pulls investors toward this type of investing is that they can put money in without the big commitment of going out and buying real estate themselves.


  • Easy to buy and sell stock
  • Offers stable dividends
  • Can be a good addition to investment portfolio
  • Professionally managed Porfolios
  • Liquid investment
  • Transparency
  • Well diversified 


  • Public company, open to public scrutiny
  • 5/50 rule, more than 5 people can not have more than 50% of management
  • Ownership widely dispersed
  • Must have +100 investors
  • Must pay out 90% of net income
  • No tax benefits (Distribution is taxed as income) 
  • No control
  • Subject to Unit Dilution
  • Investors are subject to public market volatility
Different investments for different people

Real Estate Funds

REITS are very different from Real Estate Investment Funds.

Real estate funds are better for guys like you and me. Let’s admit it, the likelihood of us being able to go out and start our own public REIT is not very high.

However…an investment fund? Totally different story. I’ve seen average joes like you and I do it, and be really, really successful.

As you consider about whether to invest in, or start, a real estate fund or a REIT, we’ll let you in a couple of the secrets concerning why we stick with the fund.

Pros of a Real Estate Fund

  • More flexibility based on physical assets
  • Private company
  • Hedge Against Inflation
  • Tangible Assets
  • Managers write the governing documents through PPM, LPA, ect..
  • Make decisions internally
  • Investors’ returns based on performance of the real estate
  • Managers retain profits
  • Specific asset classes


  • Investors’ money is locked up
  • Strick regulation
  • Concentration Risk
  • Personal liability

I fully recognize that everyone has their niche, but for me the answer is clear. Real estate funds are where its at.

“The personal autonomy and fiscal returns that comes with starting a fund are unbeatable!”

If you need help knowing the first step and finding out how to grow your real estate fund, feel free to hop on my weekly webinar!

Bridger Pennington

DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.

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