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

"REIT" is one word for three quite different investments, so start with the common skeleton before the differences. 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 feature that defines the category for investors, distribute at least 90% of its taxable income as dividends each year. In exchange it generally pays no corporate-level tax, so the income flows through to investors without being taxed twice 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. A publicly traded REIT is a stock you can trade any market day. A non-traded REIT is SEC-registered but not listed, priced by appraisal. A private REIT is a Regulation D offering open only to accredited investors. They look alike on paper, and they pay distributions the same way, but the experience of owning them, especially the experience of trying to sell, is where they diverge. The sections below take the differences one axis at a time: liquidity, pricing, access, volatility, fees, and taxes. One more shared trait is worth flagging up front: in every one of the three types you own a slice of a portfolio of real estate, not a single building, which is part of what distinguishes a REIT from a syndication or a direct purchase. That diversification is baked into the structure regardless of the access tier, so the public, non-traded, and private versions part ways entirely on the mechanics of buying, selling, and pricing, which is why this comparison keeps returning to liquidity as the hinge.

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 all follow from that listing. You get daily liquidity, the ability to sell any share on any trading day. You get a transparent market price set continuously by buyers and sellers, so you always know what your position is worth. You get heavy SEC regulation, audited financials, and analyst coverage. And you get very low minimums, since you can buy a single share with no accreditation requirement.

The cost of all that liquidity is volatility. A public REIT's price moves with the stock market and investor sentiment, and especially with interest rates, so it can fall sharply in a quarter even when the underlying buildings are fully leased and performing. In the short run the share price can diverge from the appraised value of the real estate it owns. That is the bargain: the market gives you an exit every day, and in return it marks your investment to the mood of every day. For an investor who wants real-estate exposure with the ease, transparency, and liquidity of a stock, the public REIT is the natural choice, and it asks the least of you to own.

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 single fact changes everything about liquidity and pricing. There is no daily market to sell into. Instead the shares are valued periodically by net asset value (NAV) appraisal, and you access liquidity through a redemption program that comes with caps, possible queues, and the sponsor's discretion to limit or suspend buybacks, most likely in exactly the stressed markets when investors most want out.

Minimums are modest, often a few thousand dollars, and the appeal is a reported value that tracks the real estate rather than the stock market's mood, which can steady an investor's nerves over a long hold. The trade-offs are real: limited and conditional liquidity, historically higher fees than a public index, and a valuation you take on appraisal rather than on live market consensus. A non-traded REIT is the middle path of the three, more accessible than a private REIT and steadier-looking than a public one, but only if you accept that the smooth price line hides a constrained exit. Our deeper look at the public-versus-non-traded split in that comparison unpacks the liquidity mechanics.

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 public of the three, typically with the highest minimums, often tens of thousands of dollars, and the longest commitment, with lock-ups and a tightly capped redemption program. In exchange, a private REIT can pursue strategies and assets without the full disclosure burden of a registered offering, and proponents point to the potential for higher returns and a value insulated from public-market swings.

The flip side is honest and unavoidable: less regulatory oversight, less transparency, real illiquidity, and heavy reliance on the manager's skill and integrity. You are trusting an appraisal-based NAV you cannot verify against a market, a redemption program that can be gated, and a sponsor whose track record you must underwrite yourself. Private REITs suit sophisticated investors who can meet the accredited standard, do not need the capital for years, and are comfortable trading liquidity and transparency for access and potential return. Our guide on how to invest in a private REIT walks the subscription and due-diligence process in detail.

The three, side by side

The table sets the three types against each other on the points that most shape the owning experience. Use it as a map, then read the surrounding sections for the detail behind each row.

Feature	Public Traded	Non-Traded	Private
Liquidity	Daily, on the exchange	Limited redemption program	Lowest; lock-ups apply
Pricing	Live market price	Periodic NAV appraisal	Periodic NAV appraisal
Who can invest	Anyone with a brokerage account	Public, via advisers	Accredited investors only
Minimum	Price of one share	~$1,000-$2,500	Often $10k-$100k or more
Volatility	High; stock-market-linked	Lower reported; not marked daily	Lower reported; not marked daily
Transparency	Highest; full SEC reporting	Moderate; SEC-registered	Lowest; Regulation D
Typical fees	Low expense ratio	Higher; selling and mgmt fees	Highest; sponsor and promote
Tax form	1099-DIV	1099-DIV	1099-DIV

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

How each is taxed

Here is the part that surprises investors who expect the tax treatment to track the access tier: it does not. All three types are taxed essentially the same way, because the tax rules attach to the REIT structure, not to whether the shares are listed. Distributions from any of the three report on a Form 1099-DIV, and a single distribution can carry more than one character. The ordinary-income portion is taxed at your ordinary rates, but it generally qualifies for the permanent 20% Section 199A deduction on qualified REIT dividends, which the 2025 law made permanent and which lowers the effective rate on that slice.

A portion of a distribution may be a capital-gain distribution, taxed at capital-gain rates, and a portion may be return of capital, which is not taxed in the year received but instead reduces your cost basis and defers the tax until you sell. One point worth stating plainly: ordinary REIT dividends do not get the lower qualified-dividend rate that applies to most common-stock dividends, in any of the three types; the 20% deduction is the offsetting benefit. Because the mechanics are identical across public, non-traded, and private, taxes are rarely the factor that decides among them. Our memo on how REIT dividends are taxed breaks down the three components in full.

Fees and where your return goes

The fee load climbs as you move from public to private, and it is one of the least visible differences because a steady NAV does not show the drag the way a falling share price would. A publicly traded REIT, or an index of them, can often be owned for a small annual expense ratio, sometimes a fraction of a percent, plus whatever your brokerage charges to trade, which is frequently nothing. There is no selling commission and no promote skimmed off the top. That low cost is a quiet but real advantage that compounds over years.

A non-traded REIT historically carries higher costs: upfront selling commissions paid to the advisor channel, ongoing management fees, and sometimes acquisition and financing fees. A private REIT typically sits highest, layering sponsor fees, an asset-management fee, and often a performance promote that pays the manager a share of profits above a hurdle. None of these is automatically disqualifying, because private management and deal sourcing cost money, but the all-in load is what erodes your return, and a smooth-looking NAV can mask it. The discipline is the same in every case: judge the return net of every fee, not on the headline yield, and ask the sponsor to show you the full fee schedule before you commit.

Volatility is not the same as risk

The single most common misread in this comparison is to treat the non-traded and private types as safer because their reported value barely moves. That is low reported volatility, which is a different thing from low risk. A publicly traded REIT prices real-estate stress, rising vacancy, higher interest expense, a soft sale environment, into its share price immediately and visibly. A non-traded or private REIT absorbs the same stress into a slower, appraisal-based NAV adjustment, so the bad news arrives quietly and on a delay. The underlying risk did not shrink; it was repriced on a different clock.

There is a behavioral angle, too. A daily price tempts some investors to panic-sell a sound portfolio on an ugly market day, and a steadier NAV can encourage the patience that real estate rewards. That is a genuine benefit for the right temperament. But the steadiness becomes a trap when you need liquidity and the redemption gate is down, which is exactly when stressed markets close it. Treat the stable reported price as a feature for a long, committed hold, not as evidence of lower risk, and size any non-traded or private position so you are never forced to sell into a closed gate. Our companion piece on whether private REITs are safe works through the risk factors in depth.

Redemption programs: caps, gates, and pricing transparency

For the two unlisted types, the only exit before a liquidity event is a redemption program, and understanding its limits is more important than the headline yield. A typical program lets investors request that the REIT buy back shares at the current NAV, but it caps total redemptions — commonly around 2% of NAV per month and 5% per quarter — and the board can lower, suspend, or pro-rate (gate) those caps at its discretion. The cruel arithmetic is that everyone tends to want out at the same time, in a stressed market, which is exactly when the gate comes down and requests are filled partially or not at all. A suspension can leave you waiting quarters for capital you assumed was reachable. A publicly traded REIT has no such mechanism because it needs none: you sell your shares to another buyer on the exchange any trading day, accepting whatever price the market sets.

The pricing side mirrors this. A publicly traded REIT has full pricing transparency — a live, continuous market price anyone can see. A non-traded or private REIT publishes a periodically struck NAV based on third-party appraisals, so the price you transact at is the sponsor's calculated value, which updates infrequently and can lag a turning market. Smooth, appraisal-based pricing is not evidence that value is stable; it is evidence that value is being measured slowly. Read the redemption terms and the NAV methodology in the offering documents before committing, and size any unlisted position so a closed gate is an inconvenience, never a crisis.

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 is not a direct option; a DST is, because it is structured to qualify as like-kind replacement property. Buying REIT stock with exchange proceeds would collapse the exchange into a taxable sale.

You can, however, reach a REIT with continued deferral through a two-step path: complete a 1031 into a DST, then later accept a 721 exchange of the DST property into a REIT's operating partnership for OP units, which is tax-deferred. That roll-up almost always lands in a non-traded REIT built to absorb contributed property, as we explain in DST vs. REIT. For investing new cash rather than exchange proceeds, all three REIT types are squarely on the menu, and 1031 eligibility does not enter the decision.

Which type fits you

Choose by what you value most, because there is no universally best type, only the one whose trade-offs match your situation. If you want liquidity and transparency and can tolerate stock-market volatility, a publicly traded REIT fits and asks the least of you; it slots cleanly into a broader stock-and-bond portfolio. If you want a real-estate-linked value with less daily volatility and accept limited, conditional liquidity, a non-traded REIT is the middle path, but scrutinize the fee load and the redemption terms before you commit.

If you are 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, provided the position is sized so a multi-year lock-up is an inconvenience rather than a crisis. The honest framing across all three is that a steadier reported price is not the same as lower risk; the non-traded and private types simply record real-estate stress on a slower clock than the public market does. Match the type to your time horizon, your need for liquidity, and your tolerance for both volatility and illiquidity, and review the specific offering with your own advisors before investing. Many investors hold more than one over time, a public REIT for a liquid core and a private one for a long-term, higher-conviction sleeve, so the choice is rarely all-or-nothing; it is a question of which type does which job in your plan.

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