Buying real estate has always been a popular investment choice for Australians. After all, owning a tangible asset feels reassuring, even when markets get a bit shaky. But over the past decade, investors have been looking for alternative ways to invest in property. Instead of buying entire properties, they are turning to property trusts, REITs, and even private credit as ways to diversify and grow their portfolios.
This blog unpacks what each of these options means, how they differ, and what type of investor they might suit best.
Understanding Property Trusts
In simple terms, a property trust pools money from multiple investors to purchase, manage, or develop real estate assets. These can range from office buildings and shopping centres to industrial facilities or residential projects. Instead of buying property outright, investors buy units in the trust, giving them access to the underlying returns of rental income and potential capital gains without the hassle of managing a property themselves.
There are a few broad categories to know. The most common are retail property trusts that are open to everyday investors and easily accessible through financial advisers or platforms. Next comes wholesale property trusts. These require a larger minimum investment and are meant for sophisticated investors who are ready to accept slightly higher risk for potentially higher returns. Then there are hybrid models, which blend elements of both, offering professional management but with some flexibility in investor entry or structure.
In the end, property trusts are designed to share the benefits of property ownership while spreading risk across multiple assets.
An Introduction to REITs
A Real Estate Investment Trust (REIT) is another vehicle for property investment, but it operates quite differently. REITs are typically listed on stock exchanges, meaning you can buy and sell them just like shares. This adds liquidity, something traditional property trusts often lack.
Publicly traded REITs are open to anyone with a brokerage account, while private REITs are restricted to certain investors and don’t trade on public markets. The main appeal of REITs lies in their diversification and accessibility. They often hold a mix of properties across regions and sectors, and investors can enter or exit without waiting for an underlying property sale.
For many, the regular income distributions from rental revenue are another plus. You might not have the same control as owning a physical property, but the convenience and liquidity can outweigh that for many people.
Comparing Property Trusts and REITs
Property trusts typically have a longer lock-in period for an investment. They are less affected by market fluctuations, and their performance depends on the actual property portfolio rather than on investor sentiment in the stock market.
REITs, on the other hand, are more transparent and regulated but also more volatile due to their listing on public exchanges. They suit investors who want liquidity and flexibility, while property trusts may attract those seeking stable, long-term exposure to physical assets.
It’s not really a matter of which is better; it’s about fit. Someone nearing retirement might prefer the steady distributions from a property trust. A younger investor could lean toward REITs for their liquidity and ease of rebalancing.
Introducing Private Credit as an Alternative
Private credit has nothing to do with property ownership. It focuses on lending opportunities outside the banking system. Private credit funds lend to businesses or developers, often secured by assets such as property. In return, investors earn fixed income from interest payments.
Private credit investments are particularly attractive for investors seeking stability, thanks to their predictable monthly income. And their asset-backed lending approach gives a layer of security. Moreover, returns on private credit are unaffected by fluctuations in interest rates or property prices.
Rixon Capital, for instance, offers exposure to this space through the Rixon Income Fund, which blends stable income with prudent risk management across diversified private credit assets.
Risk and Return Comparison
When comparing property trusts, REITs, and private credit, it helps to think in terms of risk and liquidity.
- Property Trusts: Moderate to higher returns, depending on the underlying assets and gearing. Typically illiquid during the trust term, but offers tangible asset exposure.
- REITs: Easier to buy and sell, but returns fluctuate with market sentiment. Liquidity can mean more volatility.
- Private Credit: Lower volatility, more predictable income, though capital is often tied up for a fixed term.
Each carries its own balance of accessibility, transparency, and income stability. The right choice often depends less on performance projections and more on personal goals and time horizons.
Choosing the Right Investment
The question is which option suits you more. Your risk tolerance, income needs, and investment horizon should shape your decision.
Long-term investors seeking steady income might find property trusts more appealing. Those wanting liquidity could find REITs more comfortable. Meanwhile, investors seeking consistent returns from asset-backed securities might explore private credit solutions such as the Rixon Income Fund.
In all cases, professional advice helps clarify how these options fit within a broader portfolio strategy. At Rixon Capital, we help investors combine traditional property investments with alternatives such as private credit to create a more resilient mix.
Conclusion
Property trusts, REITs, and private credit each offer unique benefits. Property trusts provide shared ownership in tangible assets; REITs deliver liquidity and market flexibility; and private credit offers stability through income-focused lending.
Understanding how they work and how they differ can help investors align their portfolios with their long-term financial goals. If you’d like guidance on structuring a portfolio that balances property exposure with income-generating alternatives, Rixon Capital can help.
Contact us today to learn how tailored investment strategies can help you achieve consistent, sustainable growth while managing risk effectively.
