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*FEW Gathering – September 22, 6 p.m. MT**
The next Financially Empowered Women (FEW) meet‑up is almost here. Join us for an evening of insight and connection, featuring longtime WCI friend Elisa Chiang. She will break down social narratives that hold us back and show how to translate that understanding into real financial empowerment. Don’t miss this chance to learn from a respected oculoplastic surgeon, life coach, and money strategist.
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### Dr. Jim Dahle, WCI Founder
I’m often asked to predict which investments will deliver the best returns. I’m not licensed to give specific advice, and my “crystal ball” is usually as cloudy as the person asking. Still, a particular question keeps coming back, so I’ll share my thoughts.
> **Question:**
> “I work in academia and have access to TIAA’s Real Estate Account through my 403(b). I can’t find reliable reviews. Is it a good investment compared to direct real‑estate options? How does TIAA stack up against other real‑estate players? Do the tax benefits of a 403(b) outweigh those of taxable real‑estate accounts?”
I’ve known about the TIAA Real Estate Account (QREARX) for decades, but it never mattered to me because I never had a 403(b) that included it. TIAA‑CREF offers many 403(b)s to academics, teachers, and others, and it’s historically been a solid retirement provider—though the landscape has changed with low‑cost index funds from Vanguard, Fidelity, BlackRock, etc.
The appeal of QREARX is that it gives **direct** exposure to real‑estate assets, not just shares of publicly traded REITs. That removes one layer of intermediaries, potentially lowering costs and reducing volatility and correlation with the broader equity market. However, private real‑estate is still ill‑iquid and not marked to market as often as public securities, so volatility may be hidden rather than eliminated. QREARX, being more liquid, must mark to market more frequently than most direct investments.
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#### Past Performance Snapshot (Morningstar, May 2025)
| Metric | QREARX | Category | VNQ (Vanguard Real Estate Index) |
|--------|--------|----------|-----------------------------------|
| 10‑yr return | 3 % | – | – |
| 15‑yr return | 6 % | – | 7.73 % |
| 5‑yr return | – | – | – |
| 5‑yr underperformance vs. VNQ | – | – | 6.5 % per year |
QREARX’s 15‑year return of 6.2 % is modest compared to VNQ’s 7.73 %. Over the last five years, QREARX lagged VNQ by about 6.5 % annually. Private real‑estate funds often under‑perform public REITs during market downturns, and QREARX’s delayed valuation updates may explain its sluggish gains.
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#### What QREARX Actually Does
From its prospectus:
- **Objective:** Generate favorable total returns through rental income and appreciation of a diversified portfolio of directly held private real‑estate and related investments, while offering guaranteed daily liquidity.
- **Strategy:** 75‑85 % of assets in direct real‑estate or related investments (domestic/foreign properties, joint‑venture interests, real‑estate funds, operating businesses, equity or debt securities of real‑estate companies, loans, CMBS, etc.). Up to 25 % may be in liquid real‑estate securities, but long‑term holdings in such securities are capped at 10 %. As of 12/31/2024, no publicly traded REITs or CMBS were held.
- **Liquidity:** Daily, but transactions are limited to quarterly trades to prevent market timing.
- **Fees:** 1.015 % annual expense ratio.
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#### Pros of QREARX
1. **Retirement‑Account Access** – Invest in real‑estate within a 403(b), gaining tax deferral and a potential way to hold a sizable real‑estate position when other accounts are limited.
2. **Direct Exposure** – Less reliance on REITs, potentially lower volatility and a more direct link to property performance.
3. **Liquidity** – Daily marketability, unlike most private real‑estate deals that are illiquid.
4. **Stability** – Managed by TIAA, a century‑old institution, and the fund has existed since 1995.
5. **Tax Simplicity** – No K‑1s or multi‑state filings; all tax treatment is handled within the retirement account.
6. **Passive Management** – Similar to VNQ, you don’t need to manage properties yourself.
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#### Cons of QREARX
1. **Higher Fees** – 1.015 % vs. VNQ’s 0.13 %. Fees eat into returns, especially when the fund under‑performs.
2. **Lower Returns** – Historically lagging VNQ and many passive private‑real‑estate funds. For example, the DLP Housing Fund (an evergreen private fund) delivered an average of 13 % annually from June 2021 to April 2025, far outpacing QREARX’s performance.
3. **Limited Availability** – Only accessible through certain 403(b)s or by opening a TIAA‑CREF IRA. You can’t allocate taxable capital to it, and you’re capped by your 403(b) contribution limits.
4. **Under‑performance in Recent Years** – The last five years have seen significant under‑performance relative to public REITs and private funds.
5. **Potential for Hidden Volatility** – Private real‑estate’s lack of frequent valuation can mask risk.
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#### Comparing to Other Options
| Option | Expense Ratio | Liquidity | Typical Return | Notes |
|--------|---------------|-----------|----------------|-------|
| **VNQ** | 0.13 % | Daily | ~7.7 % (15‑yr) | Low cost, highly liquid, but indirect exposure |
| **DLP Housing Fund** | Variable (often 1 % + performance fee) | Annual | ~13 % (2021‑2025) | Evergreen, higher returns, less liquid |
| **QREARX** | 1.015 % | Daily (quarterly trades) | 6.2 % (15‑yr) | Direct real‑estate, higher fees, limited access |
If you’re comfortable with a more hands‑off approach and can accept the higher fees, QREARX offers a unique retirement‑account real‑estate vehicle. If you want lower costs and higher returns, VNQ or a private fund like DLP may be preferable.
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#### Bottom Line
QREARX is an intriguing concept—direct real‑estate exposure with daily liquidity inside a retirement account. However, its higher expense ratio, modest returns, and limited availability make it less attractive for those who can invest directly in private real‑estate or in low‑cost public REITs. If you’re serious about real‑estate investing, consider exploring private syndications or funds that offer higher returns and more flexibility.
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#### Want to Dive Deeper into Private Real‑Estate?
Sign up for the **White Coat Investor Real Estate Newsletter** for tips, market insights, and new investment opportunities. Below is a snapshot of our featured partners—each requires due diligence and, in many cases, accredited‑investor status.
| Partner | Focus | Minimum | Founded |
|---------|-------|---------|---------|
| **Goodman Capital** | Single‑family / Multi‑family | $100 k | 1987 |
| **DLP Capital** | Multi‑family | $100 k | 2006 |
| **Southern Impression Homes** | Turnkey | $80 k | 2017 |
| **MLG Capital** | Multi‑family | $50 k | 1987 |
| **Mortar Group** | Syndication | $50 k | 2001 |
| **EquityMultiple** | Platform | $5 k | 2015 |
| **Black Swan Real Estate** | Multi‑family | $25 k | 2011 |
*These are introductions only; perform your own due diligence before investing.*
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**Do you invest in the TIAA Real Estate Account?**
Share your experience—what you like, what you dislike, and why you chose (or avoided) it.
