NNN Investment Funds and 'Mini-REITs' — vs Just Owning the Building

A cottage industry packages net lease into vehicles — private REITs, income funds, syndicated portfolios, the pitch-deck “mini-REIT.” The honest comparison against simply owning the building itself.

What the vehicles offer

Diversification per dollar (a $100K fund position touches dozens of leases), professional selection, and zero involvement — legitimate goods, especially below the equity threshold where quality direct deals start. Some vehicles add leverage management and institutional deal access individuals genuinely lack.

What they charge

The fee stack: acquisition fees, asset-management fees (often 1-2% annually), disposition fees, promote structures splitting upside — compounding to a meaningful share of the yield the underlying leases produce. Add liquidity terms (redemption gates, multi-year locks) and transparency that varies from audited-and-clear to trust-me. The DST version of this analysis applies broadly: you’re buying management, and management prices itself confidently.

The direct-ownership comparison

At $500K+ of equity, direct NNN ownership typically nets more yield (no fee stack), full control, 1031 mobility forever, depreciation on your own return, and the step-up endgame — at the price of concentration (managed by laddering deals over time) and the front-loaded diligence work (which is free to outsource, uniquely, in this asset class). The vehicles’ diversification argument weakens as your deal count grows; their fee drag never does.

The decision rule

Under ~$300K of allocable equity, or wanting literally zero decisions: vehicles earn their fees. Above it: own direct, ladder deals, and let the fee savings compound in your column. The industry’s quiet irony — most fund sponsors’ personal money owns buildings, not funds.