Real Estate Investment Trust (REIT)
The most accessible avenue into commercial real estate for investors, both accredited and non-accredited, has for long been publicly traded REITs. Anyone with a trading account can invest in public REITs at a low minimum investment.
However this low cost and accessibility comes at a price. Investors in REITs are not investing directly in real estate, but are instead purchasing shares in a company that derives its revenue from real estate investments. Because of this, public REIT pricing is more reactive to movements in the overall stock market, or unforeseen events at the company, than it is to the value of the underlying real estate that the REIT is invested in. Two notable examples of this volatility include GGP, which had to file bankruptcy during the financial crisis in 2009, or more recently American Realty Capital, whose stock price plunged 19% in October of 2014 due to an accounting error.
Investors in public REITs also have no control over the individual assets a REIT chooses to invest in.
Fee-heavy Non-Traded REITs (also known as Private REITs) and Private Equity Real Estate Funds are less reactive to the stock market than Public REITs, but generally offer the same limitations regarding control and come at much higher minimum investments with even higher fees.
Real Estate Crowd Investing
When investing with Acquire, you invest directly into a real estate property. Investors have direct access to the real estate they're invested in, they own the actual bricks and mortar of that buildng, and they even have the ability to drive by and see their investment at work.
Under the Acquire Real Estate crowd investing model, investors have greater transparency and control of their investment decisions as compared to those invested in REITs. With Acquire, investors are able to invest in properties of their choice, and can choose to only invest when specific deals reflect their individual goals and strategies. This enables the opportunity for greater diversification of an investor’s portfolio by geography, property type and risk profile.
Finally, when you invest in a real estate crowd investing opportunity, you're purchasing shares of a Limited Liability Company (LLC) or Limited Partnership (LP) as a limited member, and that LLC/LP owns a share of the specific investment property. This ownership structure enables investors to take advantage of certain “pass through” tax benefits as the LLC passes its profits and losses through to its members, who report their portion of the LLC's business income or losses.