How Do Real Estate Hedge Funds Work?

There are a number of different ways to passively invest in real estate. A real estate investment trust (REIT) or real estate crowdfunding opportunity are some of the more popular methods, but investors also have the option to invest in real estate hedge funds. Real estate hedge funds are a type of pooled investment fund that raises capital from multiple investors to acquire and manage real estate. Real estate hedge funds are actually quite popular, making them an appealing option for a growing investor to scale their real estate portfolio or for a passive investor looking for a competitive return.

Learn what a real estate hedge fund is, how they work, what it's like to invest in or start a real estate hedge fund, what to look for in a hedge fund, and the pros and cons of this method of real estate investing.

What is a real estate hedge fund?

A real estate hedge fund pools money from multiple investors to purchase, manage, and invest in real estate assets providing a specified return to the participating investors monthly, quarterly, or upon completion of the fund. Real estate hedge funds are a part of the private market, meaning each individual fund sets its parameters for returns or investment requirements, which can include the requirement of being an accredited investor or a minimum investment amount.

There are real estate hedge funds in every sector of real estate, including residential real estate, commercial real estate (CRE), and debt markets where the fund buys and…

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