Are private REITs right for you?
Here’s my two cents on private REITs: In most cases, the drawbacks of private REIT investing outweigh the potential benefits.
I’ve evaluated many private REITs, and I’d estimate that at least 90% charge commissions and fees I consider excessive, especially when there are excellent publicly traded alternatives. Plus, it’s tough to find an investment strategy or potential return that justifies the lack of transparency and liquidity.
It’s important to acknowledge that not all private REITs are inferior investments to their public counterparts, and many investors don’t mind the lack of liquidity.
If you find a private REIT opportunity that looks interesting, it’s important to thoroughly read the investment’s prospectus. Also, check out the background of the REIT’s management team and other key factors.
In short, when it comes to private REIT investing, the SEC and other regulatory agencies aren’t going to have your back, so you’ll need to protect yourself. If you have the time, knowledge, and desire to thoroughly evaluate private REIT investment opportunities on your own, it’s entirely possible to find a diamond in the rough.
If you don’t, you’re probably better off sticking with publicly traded REITs, which have high dividends and growth potential without the additional headaches.
