Closed vs Open Ended Private Real Estate Funds

June 9th, 2026

2 min read

3:17

What is Best for You?

Second to private equity, real estate is one of the most allocated asset classes in the alternative space.

Although there are several different vehicles for investors to choose from, the two most popular are closed-end funds and open-ended funds (interval Funds or non-traded REITs). Each product has its own nuances and characteristics, but this table will explain the primary features to assist in choosing which product is best for you.

	Closed-Ended Private Real Estate Fund	Open-Ended Private Real Estate Fund
Liquidity	None	Often, quarterly or semiannual redemptions
Typical Minimum Investment	$100k or higher	$50k or higher
Investor Status	Accredited, Qualified Clients or Qualified Purchasers	Accredited or Qualified Clients
Term	5-10 years, but can vary	Perpetual-life
Investor/Manager Alignment of Interests	Typically, a manager receives carried interest after the investor receives return of capital and preferred rate of return.	Performance fees are often paid on realized gains after hurdle, and a high-water mark is achieved.
Funding mechanism	Capital call structure	Funded at sign up
Returns	Typically higher due to illiquidity premium and value creation focus of assets	Typically lower, with emphasis on regular distributions from acquiring cash-flowing assets
Distributions	Various offerings, but distributions are often infrequent and dependent on capital events within the fund	Often, monthly or quarterly if the fund is focused on income-producing properties
Manager Compensation	Asset management fee and carried interest	Asset management fee and performance fee based on high-water mark
Redemptions	The manager never needs to sell property to meet investor redemption requests	The manager may be a forced seller to meet investor redemption requests. Redemption requests may be limited by fund mandate gates.
Typical Fund Size	$100MM-$500MM	$100MM+
Typical Project Size in Fund	$10MM-$75MM	$50MM+
Performance measure	Typically IRR	Typically IRR
Valuation	Quarterly or annually, based on appraisal methods	Reported as NAV monthly or quarterly

Closed-ended and open-ended private real estate funds each serve different investor needs. Closed-ended funds typically target higher returns through long-term investments and active value creation, but come with limited liquidity. Open-ended funds focus on income-producing assets, offering more frequent distributions and the ability to redeem periodically, though returns may be lower. Choosing the right fund depends on your goals, risk tolerance, and desire for flexibility versus potential upside.

Important Information

This article is provided solely for educational and informational purposes. The views expressed reflect general observations regarding investment analysis, private markets, real estate investing, valuation methodologies, underwriting practices, due diligence considerations, and fund structures.

The information presented is not intended as investment advice or a recommendation regarding any specific investment, manager, property, fund, security, or strategy. Readers should conduct their own independent due diligence and consult their professional advisors before making investment decisions.

Investments in private funds and alternative investments involve substantial risks and are not suitable for all investors. Such investments are generally illiquid, may involve leverage, may have limited transparency, may be difficult to value, and may result in the partial or complete loss of invested capital.

Certain statements contained herein may constitute forward-looking statements. These statements reflect current assumptions and expectations regarding future events and market conditions.

Actual results may differ materially from those expressed or implied due to changes in economic conditions, capital markets, interest rates, tenant demand, property performance, financing availability, governmental actions, and other factors beyond the control of Valoran Capital Management.