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- About Us

• Contact Us
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• Glossary
• Información en Español
  
  - Introduction to Investing - Getting Started - Five Questions to Ask Before You Invest
• Understanding Fees
• Asset Allocation
• Assessing Your Risk Tolerance
• Spending for Your Own
• Dealing with an Investment Professional
• Researching Investments
  
  - Save and Invest
• Invest For Your Goals
• How Stock Markets Work
• Investment Products
• What is Risk?
• Role of the SEC
• Glossary
  
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  - Fraud - Kinds of Fraud.
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  Breadcrumb
  
  1. Home.
• Introduction to Investing.
• Investment Products
  
  Main navigation
  
  - Save and Invest - Define Your Goals.
• Diversify Your Investments.
• Figure Out Your Finances.
• Gauge Your Risk Tolerance.
• Discover Investment Options.
• Pay Off Credit Cards or Other High Interest Debt.
• Save for a Rainy Day.
• Small Savings Amount To Big Money.
• Understand What It Means to Invest
  
  - Public Companies.
• Market Participants.
• Kinds of Orders.
• Kinds Of Brokerage Accounts.
• Stock Purchases and Sales: Long and Short.
• Executing an Order
  
  - Auction Rate Securities.
• Bonds or Fixed Income Products - Bonds.
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  - How to Submit Comments to the SEC.
• Researching the Federal Securities Laws Through the SEC Website.
• The Laws That Govern the Securities Industry
  
  Real Estate Investment Trusts (REITs)
  
  What are REITs?
  
  Property financial investment trusts (" REITs") allow individuals to purchase large-scale, income-producing genuine estate. A REIT is a that owns and typically operates income-producing property or associated assets. These may include workplace structures, going shopping malls, homes, hotels, resorts, self-storage facilities, storage facilities, and mortgages or loans. Unlike other realty business, a REIT does not develop property residential or commercial properties to resell them. Instead, a REIT purchases and develops residential or commercial properties primarily to operate them as part of its own financial investment portfolio.
  
  Why would somebody purchase REITs?
  
  REITs offer a method for private financiers to earn a share of the income produced through industrial real estate ownership - without really having to go out and purchase business genuine estate.
  
  What types of REITs are there?
  
  Many REITs are registered with the SEC and are openly traded on a stock market. These are called openly traded REITs. Others may be signed up with the SEC however are not openly traded. These are known as non- traded REITs (also referred to as non-exchange traded REITs). This is among the most essential distinctions among the numerous sort of REITs. Before investing in a REIT, you ought to understand whether or not it is publicly traded, and how this could impact the benefits and risks to you.
  
  What are the advantages and risks of REITs?
  
  REITs offer a way to include genuine estate in one's financial investment portfolio. Additionally, some REITs may use higher dividend yields than some other financial investments.
  
  But there are some dangers, especially with non-exchange traded REITs. Because they do not trade on a stock market, non-traded REITs include special threats:
  
  Lack of Liquidity: Non-traded REITs are illiquid financial investments. They usually can not be sold easily on the open market. If you need to sell a property to raise money rapidly, you may not be able to do so with shares of a non-traded REIT. Share Value Transparency: While the market price of a publicly traded REIT is easily available, it can be challenging to identify the value of a share of a non-traded REIT. Non-traded REITs normally do not provide a price quote of their value per share till 18 months after their offering closes. This might be years after you have made your financial investment. As a result, for a substantial time period you may be not able to examine the value of your non-traded REIT financial investment and its volatility. Distributions May Be Paid from Offering Proceeds and Borrowings: Investors might be attracted to non-traded REITs by their relatively high dividend yields compared to those of publicly traded REITs. Unlike publicly traded REITs, however, non-traded REITs often pay distributions in excess of their funds from operations. To do so, they may utilize offering earnings and borrowings. This practice, which is typically not utilized by openly traded REITs, decreases the worth of the shares and the money readily available to the business to acquire extra possessions. Conflicts of Interest: Non-traded REITs normally have an external manager rather of their own employees. This can lead to potential conflicts of interests with shareholders. For example, the REIT might pay the external manager considerable costs based on the amount of residential or commercial property acquisitions and assets under management. These cost rewards might not always align with the interests of investors.
  
  How to buy and sell REITs
  
  You can purchase a publicly traded REIT, which is noted on a significant stock exchange, by buying shares through a broker. You can buy shares of a non-traded REIT through a broker that takes part in the non-traded REIT's offering. You can also acquire shares in a REIT shared fund or REIT exchange-traded fund.
  
  Understanding charges and taxes
  
  Publicly traded REITs can be purchased through a broker. Generally, you can buy the typical stock, preferred stock, or debt security of a publicly traded REIT. Brokerage fees will apply.
  
  Non-traded REITs are generally sold by a broker or financial adviser. Non-traded REITs typically have high up-front costs. Sales commissions and in advance offering costs generally total around 9 to 10 percent of the financial investment. These expenses lower the value of the investment by a substantial amount.
  
  Special Tax Considerations
  
  Most REITS pay out a minimum of one hundred percent of their gross income to their shareholders. The shareholders of a REIT are accountable for paying taxes on the dividends and any capital gains they receive in connection with their financial investment in the REIT. Dividends paid by REITs usually are treated as ordinary earnings and are not entitled to the decreased tax rates on other kinds of corporate dividends. Consider consulting your tax adviser before buying REITs.
  
  Avoiding fraud
  
  Be wary of any person who tries to sell REITs that are not signed up with the SEC.
  
  You can validate the registration of both openly traded and non-traded REITs through the SEC's EDGAR system. You can likewise utilize EDGAR to review a REIT's annual and quarterly reports in addition to any offering prospectus. For more on how to utilize EDGAR, please visit Research Public Companies.
  
  You should likewise have a look at the broker or financial investment consultant who recommends acquiring a REIT. To learn how to do so, please check out Working with Brokers and Investment Advisers.
  
  Additional info
  
  SEC Investor Bulletin: Real Estate Investment Trusts (REITs)
  
  FINRA Investor Alert: Public Non-Traded REITs - Perform a Careful Review Before Investing
  
  Featured Content
  
  School's Out, Investing for Your Future Is In!
  
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