How much liquidity are you willing to sacrifice for real estate exposure?
One thing I think investors should distinguish when comparing real estate investments is the difference between owning an asset and being able to exit an investment in that asset.
A publicly traded REIT can generally be sold through the market during trading hours, although its share price can fluctuate. A private fractional investment may give someone exposure to a property but restrict transfers or redemptions for a much longer period.
Those are very different commitments, even if both investments have exposure to real estate.
I'm curious how other investors approach this trade-off.
Would you accept a less liquid investment if the underlying deal were attractive, or is the ability to exit quickly a non-negotiable requirement?
What would you need to know about redemption rights, transfer restrictions, holding periods, and exit scenarios before committing?
How much liquidity are you willing to sacrifice for real estate exposure?
One thing I think investors should distinguish when comparing real estate investments is the difference between owning an asset and being able to exit an investment in that asset.
A publicly traded REIT can generally be sold through the market during trading hours, although its share price can fluctuate. A private fractional investment may give someone exposure to a property but restrict transfers or redemptions for a much longer period.
Those are very different commitments, even if both investments have exposure to real estate.
I'm curious how other investors approach this trade-off.
Would you accept a less liquid investment if the underlying deal were attractive, or is the ability to exit quickly a non-negotiable requirement?
What would you need to know about redemption rights, transfer restrictions, holding periods, and exit scenarios before committing?
@Michele Balady, I'd be open to a less liquid investment if the deal made sense, but I'd want to understand exactly how and when I could get my money back. I'd also want to know what happens if I need to exit earlier than planned. A good return is important, but so is knowing what you're agreeing to.
I'm a real estate attorney and investor based in Maryland, and I work with clients on contracts, business agreements, and property matters. I've seen how important it is to understand your rights and responsibilities before signing, especially when your money could be tied up for years.
I appreciate you bringing this up, @Michele Balady. It's something investors should think about before committing to a deal, not when they're already trying to get out. Happy to stay connected!