First-lien private lending vs mortgage funds vs REITs
Three different ways to get exposure to real estate debt — how they compare.
There are several ways an individual can get exposure to real estate debt. Each has trade-offs on yield, liquidity, transparency, and tax treatment. Here's a plain comparison.
Comparison
- First-lien private lending (AVCG)
- Specific loans, monthly interest, 10 – 12%
- Mortgage funds
- Pooled loans, quarterly distributions, ~7 – 10%
- Mortgage REITs (public)
- Publicly traded, market-priced, variable
Transparency
First-lien private lending gives you the most transparency — you can see the specific property your capital is deployed against. Mortgage funds pool across many loans, so you get a diversified but opaque position. REITs give you a stock ticker but very limited loan-level visibility.
Liquidity
REITs are the most liquid (sold like any stock). Mortgage funds usually have monthly or quarterly windows. First-lien private lending is the least liquid — capital is tied to specific loans and is repaid when those loans exit.
Yield
First-lien private lending typically offers the highest yield of the three, precisely because of the reduced liquidity and concentration. That's the trade you're making.
Related guides
Keep reading
How first-lien security protects your capital
What 'first lien' means, why it matters, and what happens in a worst-case scenario.
Using a self-directed IRA to invest in real estate debt
Retirement funds, working in first-lien private lending — how it actually works.
Have more questions?
Talk to a specialist — we'll walk through anything the guide didn't cover.