Investors are always on the lookout for ways to diversify and balance their portfolios while growing their net worth. Two of the most common ways to invest in commercial real estate are through public real estate investment trusts (REITs) and investing in CRE through private investment groups. (Private CRE vs Public REITs ) Although you can invest in real estate through both options, they are quite different in terms of execution and returns. In this article, we help you understand private commercial real estate and Public REITs and explain their differences to help you choose the right option for yourself.

What is a Public REIT?

A public REIT is a publicly traded REIT that is regulated by the SEC and it is traded on the major security exchanges. You can purchase and sell the shares of publicly traded REITs on an exchange like NYSE.

What Do We Mean When We Say Private CRE Investments?

Private CRE investments involve investing through a broker or a firm, and the investment is purchased or sold by the firm on your behalf. It is not traded on the stock exchange, and you cannot buy and sell whenever you want to.

What Do We Mean When We Say Public REITs?

If you are thinking about investing in public REITs, there are certain characteristics you should be aware of. One of the most important is that they are traded on the major stock exchanges-- which means you can easily get access to information about them. Additionally, all institutional as well as individual investors are eligible to invest in them. There is usually a minimum investment requirement and they usually require fairly high liquidity to really accumulate capital. You can buy and sell them at any time through the stock exchanges.

The Difference Between Private Investments & Public REITs in Commercial Real Estate

Private investments as well as public REITs in commercial real estate may serve the same purpose but they come with their own advantages and disadvantages. Let’s take a look at them in detail.

1. Risk Private investing can carry higher risk or lower stability because your investment is not regulated by the SEC and you do not always have enough information before you invest. On the other hand, public REITs are relatively safe and bring stability to your portfolio. You can educate yourself about the trust and its investment strategy and buy or sell when you want to.
2. Return With low risk, comes low return. Hence, public REITs are slightly more conservative and your returns may be moderate. However, private REITs can carry a higher risk but also have a higher return potential. If you have a high-risk appetite, private REITs can boost your portfolio.
3. Access It can be difficult to get access to private investments and to know which one may be the most suitable for your portfolio because you may not have a lot of information. . Some REITs also have a high minimum investment criterion--many only allow accredited investors to contribute. On the other hand, it is very easy and straightforward to invest in public REITs. Anyone can invest and you can buy or sell the REITs on the stock exchanges.

REITs can help diversify your portfolio while generating steady income but it is important to consider your investment goals before investing in them. Contact Us Now for More Information Phone: 314-588-1900