Private vs. Public vs. Non-Traded REITs

"REIT" is one word for three quite different investments. A publicly traded REIT is a stock you can buy and sell any trading day; a non-traded REIT is an SEC-registered fund without a daily market; a private REIT is a Regulation D offering open only to accredited investors. They share the same tax skeleton — a company that owns income real estate and passes most of its income to investors — but they differ on the things that actually shape your experience: liquidity, access, fees, transparency, and valuation. This memo lays the three side by side so you can match the right one to your goals.

What all REITs share

Before the differences, the common skeleton. A REIT is a company that owns (or finances) income-producing real estate and elects special tax treatment: to qualify, it must invest predominantly in real estate, earn most of its income from it, hold a broad shareholder base, and — the key feature for investors — distribute at least 90% of its taxable income as dividends. In exchange it generally pays no corporate-level tax, so income flows through to investors largely untaxed at the entity level. Every REIT, public or private, shares this structure; our REIT guide covers it in full. What separates the three types is not the tax skeleton but how you buy, sell, and value the shares.

Publicly traded REITs

A publicly traded REIT lists its shares on a stock exchange, so you buy and sell them like any stock through a brokerage account. The defining features follow from that listing: daily liquidity, a transparent market price set continuously by buyers and sellers, heavy SEC regulation and disclosure, and very low minimums — you can buy a single share. The cost of all that liquidity is volatility: a public REIT's price moves with the stock market and investor sentiment, sometimes diverging from the value of the underlying real estate in the short run. For an investor who wants real-estate exposure with the ease and liquidity of a stock, the public REIT is the natural choice.

Public non-traded REITs

A public non-traded REIT is registered with the SEC and sold through broker-dealers and advisers, but its shares are not listed on an exchange. That changes everything about liquidity and pricing. There's no daily market; instead, the shares are valued periodically by net asset value (NAV) appraisal, and you access liquidity through a redemption program with caps, possible queues, and the sponsor's discretion to limit or suspend redemptions. Minimums are modest (often a few thousand dollars), and the appeal is a value that tracks the real estate rather than the stock market's mood. The trade-offs are limited liquidity, historically higher fees, and a valuation you must take on appraisal rather than market consensus.

Private REITs

A private REIT is offered under Regulation D, generally only to accredited and institutional investors, and is not registered for public sale. It is the least liquid and least transparent of the three, typically with the highest minimums (often tens of thousands of dollars) and the longest commitment. In exchange, private REITs can pursue strategies and assets without the constraints and disclosure burdens of public vehicles, and proponents point to the potential for higher returns and a value insulated from public-market swings. The flip side is real: less regulation, less transparency, illiquidity, and heavy reliance on the manager. Private REITs suit sophisticated investors comfortable with those trade-offs.

The three, side by side

Fees, leverage, and strategy vary widely within each category; read each offering on its own terms.

A note on REITs and 1031 exchanges

One point unites all three types and matters to many of our readers: REIT shares of any kind generally cannot be the replacement property in a 1031 exchange, because a share is a security, not like-kind real estate. If your goal is to defer a real-estate gain, a REIT isn't a direct option — a DST is. You can, however, reach a REIT with continued deferral through the two-step DST-then-721 path, as we explain in DST vs. REIT. For investing new cash rather than exchange proceeds, REITs are squarely on the menu.

Which type fits you

Choose by what you value most. If you want liquidity and transparency and can tolerate stock-market volatility, a publicly traded REIT fits and asks the least of you. If you want real-estate-linked value with less daily volatility and accept limited liquidity, a non-traded REIT is the middle path — but scrutinize fees and the redemption terms. If you're an accredited investor seeking access to private strategies and are comfortable with illiquidity and lighter transparency in pursuit of potential return, a private REIT may fit. There's no universally best type — only the one whose trade-offs match your goals, time horizon, and tolerance for both volatility and illiquidity.

Frequently Asked Questions

Glossary

Publicly Traded REIT

A REIT whose shares trade on a stock exchange with daily liquidity and a market price.

Non-Traded REIT

An SEC-registered REIT not listed on an exchange, valued by NAV with limited redemption liquidity.

Private REIT

A Regulation D REIT offered to accredited investors, the least liquid and transparent type.

Net Asset Value (NAV)

The appraisal-based per-share value used by non-traded and private REITs in place of a market price.

Disclosures