What is a Real Estate Investment Fund?
Here’s how a real estate investment fund works—and whether it’s right for you.
What is a Real Estate Investment Fund?
Here’s how a real estate investment fund works—and whether it’s right for you.
Real estate investment funds, both public and private, are popular investments. According to NAREIT, there are 1,021 publicly-traded real estate investment funds structured as real estate investment trusts (REITs) in operation across 42 countries around the world.1 Combined, they boast a market capitalization of roughly $2.04 trillion.1
Data source: Global Real Estate Investment. NAREIT (National Association of Real Estate Investment Trusts). December 2024.
The private market is similarly robust. Statistics compiled by Preqin in May 2023, the date of latest available data, counts 2,035 private real estate funds in operation, up roughly 14% from 1,779 at the start of 2023.2
But what exactly is a real estate investment fund? How does it work? Here’s what you need to know as an investor.
How does a real estate investment fund work?
Whether publicly or privately traded, real estate investment funds share many basic attributes. At its core, a real estate investment fund is a professionally-managed investment vehicle that pools money from passive real estate investors.
Fund managers, investment professionals who carry out the fund’s investment strategy and handle the fund’s day-to-day operating activities, then deploy the pooled capital into a variety of income-producing real estate equity or credit investments, which will vary depending on the fund’s strategy.
For example, investments in a multifamily-focused real estate fund may include equity ownership of attainable apartment communities, direct loans to mission-aligned real estate sponsors, or preferred equity stakes in build-to-rent communities. Meanwhile, other real estate investment funds may allocate to mixed-use communities, buy and renovate hotels, invest in downtown office space, or partner with other sponsors to build data centers.
Regardless of the specific assets they target, one common attribute shared by most real estate investment funds is that they invest in multiple different deals simultaneously. This means that real estate funds are generally more diversified than real estate deals (also known as syndications), which only invest in a single asset at a time.
With the DLP Housing Fund, you can gain diversified exposure to multifamily workforce housing communities across the Sunbelt, along with the potential for targeted returns of up to 12%.
What about private real estate investment funds?
There are some distinctions to note between public and private real estate investment funds, too.
Although both public and private funds are pooled investment vehicles that provide passive investors with exposure to real estate, private real estate investment funds are restricted to accredited investors only.
This definition, maintained by the U.S. Securities and Exchange Commission (SEC) under Rule 501 of Regulation D, means an individual or household with a net worth of at least $1 million, not including the value of their primary residence.3 You can also qualify as an accredited investor if you’ve earned $200,000 or more (or $300,000 or more in combination with your spouse) in the last two consecutive years, and reasonably expect to do the same in the current year.3
Private real estate funds also come with much higher investment minimums than publicly-traded funds. While you can invest as little as the price of one share in an exchange-traded REIT, private funds often feature minimums ranging from $100,000 to $250,00 or more.4 This can be beneficial for high-net-worth investors who want to gain diversified exposure to real estate with a single investment, but it may be a considerable barrier to entry for some investors.
Should you invest in a real estate fund?
Whether a real estate investment fund is right for you will ultimately depend on your personal financial situation, investment objectives, time horizon, and how actively you wish to manage your assets. For certain high-net-worth investors, however, real estate investment funds present a potentially compelling way to gain exposure to the asset class.
A real estate fund may be a good fit for you if you are an accredited investor interested in:
Professional management. Because real estate investment funds are professionally managed by fund managers, you won’t have to worry about deal sourcing, due diligence, or asset management. Instead, you’ll be able to invest in real estate in an entirely passive manner.
Efficient diversification. Real estate investment funds allocate to a basket of assets at once, which means they are relatively more diversified than single-deal syndications. For a high-net-worth investor looking to deploy a significant amount of capital, a fund can provide exposure across numerous assets and geographies with a single investment, a task that would be complex and time-consuming to replicate individually.
Access to larger, institutional-quality investments. Experienced fund managers that have deep industry networks or track record may have access to exclusive or off-market investment opportunities. This can allow you to gain exposure to assets that you may not be able to otherwise.
With $5.25+ billion in assets under management* and a decade-long track record of success, DLP Capital has the right investment expertise, resources, and solutions for accredited investors.
How does a real estate investment fund work?
A real estate investment fund works by pooling capital from a large number of passive investors. The fund’s manager, who handles the day-to-day work, then allocates this capital to a variety of real estate equity or credit investments.
Is a REIT a good investment?
A REIT may be a good investment if you are interested in gaining diversified exposure to a large number of real estate investments at once. A REIT may also be the right fit for you if you are interested in long-term growth as well as current income.
What is a REIT and how does it work?
A REIT, short for “real estate investment trust,” is an investment vehicle that pools capital from a large number of passive investors. These funds are then invested by the REIT into a diversified array of income-producing real estate investments, like multifamily communities, RV parks, strip malls, hotels, or office buildings.
Can I invest $1,000 in a REIT?
Yes. In fact, you can invest in a publicly-traded REIT for as little as the price of one share. By contrast, private REITs often impose five- or six-figure minimums, so it would not be possible to invest as little as $1,000 here.
Are real estate funds risky?
It depends. Because real estate funds invest in a large number of deals at once, they are potentially less risky than standalone deals. However, real estate funds are nonetheless exposed to systemic (i.e. market) risk and manager risk, and may potentially lose value or underperform.
1Global Real Estate Investment. NAREIT (National Association of Real Estate Investment Trusts). December 2024.
2Private equity real estate funds in market swell to record level. Preqin. May 2023.
3Regulation D—Code of Federal Regulations. National Archives. May 2025.
4How to Invest in Private Equity Real Estate. Investopedia. December 2024.
*Based on DLP Capital internal data as of December 31, 2024.
STATEMENTS ARE THOSE OF DLP CAPITAL ONLY AND ARE NOT GUARANTEED, NOR SHOULD SUCH STATEMENTS BE RELIED UPON. FORWARD-LOOKING STATEMENTS ARE EXPRESSIONS AND BELIEFS OF DLP CAPITAL AND SHOULD NOT BE RELIED UPON. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. NOTHING IN THIS IS A SOLICITATION OR OFFER OF SOLICITATION. ALL INVESTMENTS IN ANY DLP CAPITAL SPONSORED FUND ARE TO BE MADE AFTER A REVIEW OF THE PPM, OA, AND SUBSCRIPTION AGREEMENT. DLP CAPITAL IS NOT PROVIDING TAX ADVICE. CONSULT YOUR TAX AND LEGAL PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISIONS.
