Understanding the Shift from Public to Private Real Estate Investments
Over the past decade, Real Estate Investment Trusts (REITs) have become a popular choice for investors seeking exposure to real estate without the hassle of owning and managing property directly. Public REITs, in particular, offer liquidity, accessibility, and the convenience of trading on major stock exchanges.
But more recently, a noticeable shift has begun:
Many experienced investors are moving capital from public REITs into private real estate offerings.1,2
While some investors aren’t abandoning REITs altogether, recent trends suggest growing interest in private real estate alternatives alongside them. In fact, private non-traded REITs raised $4.2 billion in the first half of 2025 — roughly 45% more than their public counterparts.1 At the same time, the 2024 UBS Global Family Office Report shows that more than half of family offices now invest in real estate through direct ownership, favoring the transparency, alignment, and control it provides.2
These shifts hint that experienced investors are complementing or diversifying away from public REIT exposure into private offerings, particularly in segments like multifamily, where fundamentals remain resilient.
So what’s driving this trend? Below, we break down the reasons behind the move and how private real estate investments compare.
REIT Volatility Mirrors the Stock Market
While REITs own physical real estate, their share prices are influenced by and move with the public markets. Nareit notes that listed REITs are priced in real time by equity investors, so sentiment and rate moves can drive price swings even when property fundamentals are steady.3 That means even if a REIT’s underlying properties are performing well, its value can fluctuate based on broader market sentiment, interest rates, or macroeconomic events.
Private real estate, by contrast, is appraised periodically and influenced more directly by fundamentals like rent growth, occupancy, and operations and therefore more insulated from daily market swings.4
Limited Control and Transparency
Most public REITs operate as large, diversified portfolios. While this reduces risk, it also means individual investors have little visibility or influence over what they actually own.
Private real estate offerings, especially single-asset or focused funds, offer:
- Full access to the property business plan
- Transparency into debt structure and underwriting assumptions
The ability to invest in specific assets or strategies that align with your outlook
Tax Efficiency
Many investors are surprised to learn that public REIT dividends are often taxed as ordinary income, not at more favorable capital gains rates.
Private real estate offers potential tax advantages, including:
- Depreciation and cost segregation benefits
- 1031 exchange eligibility (in certain structures)
- K-1 reporting with pass-through deductions
These benefits could improve after-tax returns for long-term investors. Outcomes depend on deal structure and an investor’s profile; always confirm with your tax advisor before relying on projected benefits.5
Long-Term Focus vs. Short-Term Pressures
Public REITs are under constant pressure to meet quarterly earnings expectations. This can lead to short-term decision-making that prioritizes optics over long-term value creation.
Private sponsors, by contrast, can execute multi-year business plans without the distractions of daily share price performance. This flexibility often allows for more thoughtful capital expenditures, renovations, and tenant strategies.
Access to Institutional-Quality Deals
In the past, private real estate was mostly reserved for institutions or ultra-high-net-worth investors. But platforms like Steadfast Direct are changing that—giving individual accredited investors access to institutional-quality properties with aligned incentives and full transparency.
At Steadfast, we:
- Acquire properties using our own capital first
- Fix operational risks before opening deals to investors
- Invest alongside you, and only earn performance incentives after distributions begin
Should You Ditch REITs Entirely?
Not at all. Public REITs can still serve a purpose for investors who value daily liquidity, ease of access, and a completely passive experience. They remain a useful tool in diversified portfolios.
But for investors seeking:
- Stable, income-oriented cash flows tied to property operations
- Greater transparency and control over what they own
- Closer alignment with experienced sponsors investing alongside them
- Potential tax advantages and the ability to hold for long-term value creation
…direct private real estate may deserve a closer look.
Interested in learning how Steadfast Direct structures its private apartment investments?
Disclaimer: The information provided herein is for informational and educational purposes only and should not be construed as investment advice, an offer, or a solicitation to buy or sell any security. Private real estate investments involve significant risks, including loss of principal, and are intended for accredited investors who understand and can bear those risks. Past performance is not indicative of future results. Forward-looking statements are based on current assumptions and expectations; actual results may differ materially. Investors should conduct their own due diligence and consult with their financial, legal, and tax advisors before making any investment decision.
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