What’s the Minimum REIT Investment? How Much to Invest in a Private Mortgage REIT

Investing in Real Estate Investment Trusts (REITs) is a popular choice among investors who want exposure to real estate without the annoying details involved in owning and managing properties. 

However, understanding the minimum REIT investment requirements is foundational for making informed decisions and, ideally, the most return on your investment strategy. 

In this article, we’ll show you the general minimum investment amounts needed for REITs, focusing on private mortgage REITs. 

We’ll also discuss how Marquee Funding Group fits into this landscape and how its minimum investment requirement compares to other fund types.

Understanding REITs and their types

What is a REIT?

A REIT—or Real Estate Investment Trust—is a company that finances, owns, and operates income-producing real estate. 

REITs pool the capital of numerous investors, thereby allowing individuals to invest in large-scale, income-generating real estate

They are required (notice that word “required!”) to pay their shareholders at least 90% of their taxable income via dividends, making them attractive to income-seeking investors

Types of REITs

1. Equity REITs: These REITs own and operate income-generating real estate, and income generation primarily comes through leasing spaces and collecting rents on the properties they own
2. Mortgage REITs: Also known as mREITs are REITs that provide financing for income-producing real estate through originating or purchasing mortgages and mortgage-backed securities; income is earned from the interest on these financial assets
3. Private REITs: These REITs are not traded on public exchanges and are typically sold to institutional investors or accredited investors through private placements

Private REITs offer less liquidity but can provide higher returns.

Minimum investment requirements for REITs

Publicly traded REITs

These REITs are listed on most major stock exchanges, offer a high level of liquidity, and typically have low minimum investment requirements. 

Investors can buy shares in these REITs just like any public company, often with investments as low as a single share’s price.

Non-traded REITs

Non-traded REITs are not listed on public exchanges and are sold through broker-dealers. These REITs often require higher minimum investments, ranging from $1,000 to $25,000. 

They offer less liquidity than publicly-traded REITs, but they can be appealing to investors seeking stable income and potential capital appreciation.

Private mortgage REITs: a closer look

What are private mortgage REITs?

Private mortgage REITs focus on providing real estate financing rather than owning properties. 

They invest in mortgages and mortgage-backed securities, generating income through interest payments. These REITs are not publicly traded and are typically accessible only to accredited investors.

Minimum investment for private mortgage REITs

The minimum investment for private mortgage REITs can vary widely. 

Generally, they require a higher initial investment compared to publicly traded or non-traded REITs due to their private nature and the higher potential returns they offer

Minimum investment thresholds can range from $10,000 to $100,000 or more, depending on the REIT’s structure and investment strategy

Marquee Funding Group: minimum investment requirements

$50K minimum investment

Marquee Funding Group, a prominent private mortgage REIT sector player, has set a minimum investment requirement of $50,000 for their Capital Fund 1. 

This threshold is designed to balance accessibility for serious investors while ensuring that the fund can operate efficiently and deliver attractive returns to its investors.

Comparing to other fund types

Mutual Funds

Typically, mutual funds have minimum investment requirements ranging from $500 to $3,000, making them accessible to many investors. 

However, due to their diversified nature and lower risk profile, returns are generally lower compared to private mortgage REITs.

Hedge Funds

Hedge funds often require very high minimum investments, sometimes starting at $100,000 to $1 million. They target high-net-worth individuals and institutional investors, offering the potential for high returns with higher risk.

Private Equity Funds

Like hedge funds, private equity funds also have high minimum investment requirements, often starting at $250,000 or more. 

These funds invest directly in private companies and real estate, offering the potential for significant returns over the long term.

Benefits of investing in private mortgage REITs

Higher potential returns

Private mortgage REITs, such as those offered by Marquee Funding Group, often provide higher potential returns than publicly traded REITs and other fund types. 

Investing in mortgage loans and mortgage-backed securities can achieve attractive interest income, especially in a low-interest-rate environment.

Diversification

Investing in private mortgage REITs can add diversification to an investor’s portfolio. These investments are less correlated with the dynamic stock market, giving investors a helpful buffer against market volatility and potential downturns.

Professional management

Private mortgage REITs are managed by experienced professionals with a deeper understanding of the diverse real estate market and mortgage industry. 

This expertise can help mitigate risks and enhance returns for investors.

Risks to consider

Liquidity risk

One of the main risks of private mortgage REITs is their lack of liquidity. 

Unlike publicly-traded REITs, private REITs cannot be easily sold on the open market, so investors need to be prepared to hold their investments for the long term, typically ranging from 1-3 years..

Market risk

While private mortgage REITs can offer higher returns, they are also subject to market risks, including changes in interest rates, property values, and economic conditions. 

Investors must always assess their risk tolerance and investment goals before committing to these or similar investments.

REIT minimum investments: The bottom line

Investing in private mortgage REITs can be a lucrative opportunity for those seeking exposure to the vast real estate market without the hands-on issues of directly owning property. 

However, comprehending the minimum investment requirements is essential if you’re going to successfully incorporate them into your overall investment strategy.

Marquee Funding Group offers a compelling option with only a $50,000 minimum investment—threading the equilibrium of accessibility beyond everyday investor levels with the potential for high returns. 

If this threshold is compared to other fund types, investors can better understand their options and choose the investment strategy that aligns with their financial goals.

Marquee Funding Group Capital Fund 1  

Whether you’re a seasoned investor or just starting, private mortgage REITs can offer attractive returns and diversification benefits, making them a valuable addition to a well-rounded investment portfolio.