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Clarity Financial - A Columbia, MO fee-only financial advisor — Non-traded Real Estate Trusts Have Added Lipstick, but are Still Pigs

Non-traded Real Estate Trusts Have Added Lipstick, but are Still Pigs

REITs, or Real Estate Investment Trusts, are fairly confusing. Public REITs come in two different platforms – exchange-traded and non-traded.

Exchange-traded and non-traded REITs have a handful of similarities. For example, each is an investment in real estate. They’re also each required to distribute a minimum of 90% of taxable income to shareholders on an annual basis. Finally, they’re both required to file quarterly and annual reports – which isn’t uncommon for a wide variety of regulated investment options.

This, however, is where their similarities end. Exchange-traded REITs are traded publicly on a national securities exchange, while non-traded REITs aren’t. This means that non-traded REITs have significantly less liquidity, and often when investors decide to redeem non-traded REITs, there’s no guarantee they’ll be able to and if they can it may be very discounted. Sometimes it takes 10+ years for an REIT to be publicly listed, or for an REIT to liquidate its assets. Non-traded REITs are also known to have absurdly high fees, which can be damaging to the investor’s portfolio.

Read more about non-traded REITs and how they continue to rebrand themselves to get in front of investors in our article in Columbia Daily Tribune.

As a financial planner specializing in comprehensive financial planning, Tim enjoys helping clients in Columbia, MO with managing their taxes, financial risks and other financial issues.

If you would like to learn more about this and other personal financial planning topics serviced by Clarity Financial please contact us at 573-447-7007. Clarity Financial, LLC is a fee-only financial advisory firm in Columbia, MO. Appointments are welcome and initial consultations are free. 

Certified Financial Planner™ professional

Member of the Alliance of Comprehensive Planners

Member of the National Association of Personal Financial Advisors

Enrolled Agent designation from the IRS

This article is the property of Clarity Financial LLC.