Most people weighing a private real estate investment start with the projected return. It’s the headline number and it’s designed to capture your attention. But I’d look at it last, because that number is only as good as the team standing behind it.
We’ll compare the main private real estate options side by side, then walk through the order I use to evaluate any opportunity, and why the pitch deck is the final step, not the first.
Private real estate is four different arrangements for your money, not one
For most investors I talk with, public REITs are where real estate starts. They’re listed on an exchange and easy to buy, so they feel familiar. Private real estate can feel like more of a black box by comparison. It’s usually described as property investments that don’t trade on a stock exchange, but that leaves out the part that matters: it covers four distinct ways to invest.
Every one of them comes back to real buildings, whether you own them, own a piece of them, or lend against them. What each option asks of you, and what they give back, can look completely different.
Direct ownership: full control, full responsibility
Buying a rental property is the most familiar way in. You own the asset and make the calls, from who rents it to when you sell. Depreciation and other tax benefits can make ownership attractive, though the details depend on your situation, so it’s worth talking with your tax advisor.
The trade-off is that the property depends on you. Vacancies and repairs land on your desk, or on a manager you have to oversee. Even with good help, owning rentals is rarely the hands-off income people picture when they buy.
Syndications: one deal, one plan, one team
In a syndication, a group of investors pools money to buy a specific property, led by a sponsor who runs the project. You choose exactly which deal you’re in, and if the sponsor’s plan works, the payoff can be meaningful. Online marketplaces such as RealtyMogul list individual deals from different sponsors, so accredited investors can compare offerings and pick them one at a time.
You’re also betting on a single property and a single team. Your money is usually committed until the property sells or refinances, which often takes five to seven years or longer. Distributions (your share of the income) depend on how the building performs along the way. Once you’re in a real estate syndication, day-to-day decisions belong to the sponsor.
Private equity funds: several properties, longer commitments
A real estate private equity fund pools investor money across several properties, so your outcome doesn’t hinge on one building. The fund manager picks the deals, which spares you from evaluating each one. Managers range from global firms like Blackstone, whose real estate business has been investing since 1991, to specialists like Origin Investments, which focuses on apartment communities and limits its funds to accredited investors.
In exchange for that diversification, commitments often run longer. Traditional closed-end funds typically lock investors in for 10 to 12 years. Fees usually include both a management fee and a share of the profits. Much of the return in real estate private equity often arrives when properties sell, which makes it harder to plan around year to year.
Private lending funds: earning interest instead of owning
Here’s the simplest way to think about it: instead of buying property, you’re lending money to people who do. They pay you interest, and the loan is backed by the real estate. The DLP Lending Fund, for example, focuses on workforce housing and makes first-position loans to real estate sponsors, meaning it’s first in line to be repaid.
Because your return comes from interest rather than appreciation, income tends to arrive on a more defined schedule. You won’t share in the upside if a property’s value climbs, and terms vary widely from fund to fund, so read the fine print on rates and exit options before you commit to real estate debt investing.
Side by side, the four options ask very different things of you
| Time committed | How you’re paid | What cuts into returns | Your involvement | What you can see | |
| Direct ownership | Until you sell | Rent after expenses, plus appreciation | Mortgage, repairs, vacancies | High | Everything |
| Syndications | Often 5-7+ years | Distributions, plus profit at sale | Sponsor fees and profit share | Pick each deal | Sponsor updates |
| Private equity funds | Often 10-12 years | Mostly at sale | Management fee and profit share | Pick the fund | Manager reports |
| Private lending funds | Varies | Interest on a set schedule | Fund fees | Pick the fund | Varies by fund |
Evaluate the people before the numbers
When I talk with investors moving into private real estate for the first time, most of them start in the same place: the deal. What’s the return, what’s the property, how soon does it pay? It’s a natural instinct, but it’s backwards. The order I’d recommend starts with you, moves to the people, and saves the deal for last.
Start with the job you need your money to do
Before you look at a single offering, get clear on what you want this money to do. Maybe it’s steady income you can live on, growth you won’t touch for ten years, or access in case something comes up. Each of those points you toward a different kind of investment.
Skip this step and it’s easy to end up with what I call a financial junk drawer: a handful of deals, each picked because it sounded good at the time, that don’t add up to the goal you started with.
Then get to know who you’d be trusting
Sooner or later, most real estate investments hit a rough patch. A wall gets opened and the repair costs far more than planned. Interest rates change, and a market that looked strong softens. None of that is unusual, and it isn’t always the sponsor’s fault.
What matters is how the people running your money respond when it happens. The most revealing question you can ask any sponsor is simple: what happened on your worst deal? What happened to the company, and what happened to the investors? How someone answers tells you who they’ll be when the market turns, because how people treat investors under pressure doesn’t change with the market.
Look at what they’ve navigated through, not just what they’ve built
Once you trust the people, look at their track record, whether you’re vetting an individual sponsor or a larger real estate investment company. A few good years in a rising market don’t tell you much. You want to know which downturns this team has operated through and what their investors experienced along the way.
Look for a sponsor with two kinds of expertise, which is rarer than it sounds. The first is running real estate day to day. The second is setting up the deal so your money is protected if things go wrong, including the ability to step in and take control when a project goes sideways. A sponsor with only one of those skills leaves a gap, and you’re the one who ends up paying for it.
Look at the deal last
With those answers in hand, the deal itself gets much easier to read. Now the practical details matter: how long your money is committed, how you get paid, what fees come out, how involved you need to be, and how you’ll see what’s happening after you invest.
If regular income is the job, ask whether an offering pays you from money the properties earn today or from a plan that hasn’t played out yet.
This is also where the projected return finally earns its place, and where it helps to be honest with yourself. A lot of investors chase the highest number on the page, then spend years wondering whether it will show up. If what you really want is peace of mind, knowing what’s coming and when can matter more than a bigger number you can’t count on.
If you’d like help sorting out the job your money should be doing before you compare options, a clarity call is a good place to start.
Freedom Notes: fixed returns from a team with its own money in the deals
When I built Freedom Notes, I wanted to offer something that would stand up to the same questions I’d ask any sponsor myself, in the order I’d ask them.
Two tracks, depending on the job your money has. The income track pays out quarterly for investors who want money coming in now. The growth track lets returns compound for investors who’d rather let it build. You choose the track that matches your goal.
The same team runs the properties and your investment. We own and operate the properties we invest in, and our own capital is invested in the deals alongside our investors’. When you have a question, you can reach our investor relations team directly and talk to a real person about your account. Fund administration is handled through InvestNext, an independent firm that double-checks our accounting.
A track record built across more than one hard market. We’ve operated for more than 17 years, through the pandemic and the interest rate increases that followed, with no missed investor payouts to date, according to Freedom Family Investments. Past performance does not guarantee future results.
Room for things to go wrong. We look for projects expected to earn roughly 20% to 22%, while our investors may target 8% to 14%*. That gap is designed to act as a cushion, so if a project earns less than planned, there’s room to absorb it before investor returns are affected. No structure removes risk entirely, but this one is built with a wider margin of safety.
Terms you can plan around. Investors may target 8% to 14%* annually, depending on the offering. An annual exit option is available starting in year one, and you receive a 1099 at tax time rather than the K-1 forms many private investments send.
*Target returns are not guaranteed and vary by offering, investment tier, and payout track. Like any private investment, Freedom Flagship Notes carry real risk, including the possible loss of principal. Review the offering documents and talk with your own financial and tax advisors before investing.
Four situations where a different path may serve you better
We designed Freedom Notes so investors get a defined target and fewer decisions to manage. And we also left some things out on purpose. If any of these matter to you, a different path may fit better.
If you want a share of the appreciation, an equity syndication or private equity fund gives you ownership in the property’s growth, with more uncertainty about timing.
If depreciation is central to your tax plan, direct ownership or an equity syndication lets you deduct a building’s wear and tear from your taxable income, which a lending investment doesn’t offer. Your tax advisor can help you weigh it.
If you want to choose every deal yourself, syndications or direct ownership let you evaluate and commit property by property.
If you may need your money on short notice or are starting below $25,000, public REITs let you sell on any trading day and buy in with a single share, with more exposure to market swings.
Not sure which path fits the job your money needs to do?
A clarity call is a 30-minute conversation about your goals and how private real estate might fit into them. We’ll walk you through how Freedom Notes work, answer your questions about the structure, and talk through any other options you’re weighing.
It isn’t a sales call. The goal is to help you understand how Freedom Notes work and give you an honest read on whether this fits your situation, even if the answer is no.
