Non Traded Reits - What Are They

Non Traded REITS – What Are They?

By: - Investing - September 15, 2011
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If you have ever stumbled up any real estate investment literature, you may have seen something called a REIT. REIT stands for “Real Estate Investment Trust” and it uses the capital from many shareholders to buy one piece of real estate. REITs come in two forms, traded REITs and non traded REITs. Traded REITs are directly traded on the stock exchange and the price per share can change on a daily basis. Non traded REITs do not trade on the stock exchange that the price is non changing. At some point, once the acquisitions of all holdings are done, the REIT can be offered out in an IPO and eventually traded on the market. From then on, it becomes a traded REIT and the price can change daily.

Advantages of a non traded REIT are many. These REITs can help eliminate temptation and stop someone from making hasty decisions. You can avoid volatility and unpredictability in the market. You will always know where you stand in a non traded REIT. You can also reduce transaction costs and when it has an infinite life provision, the non traded REIT can be bought and sold for better prices, which means you gain from your investment. These REITs also offer limited liquidity, predictable cash flow, and good tax benefits.

There are many types of REITs. In fact, there are over 200 traded REITs and over 80 non traded.  If you do a search online you will find many sites that have a list of REITs but be cautious as many of the sites are several years old. One of the top results on Google concerning REITs is actually from 2002. If you followed the list and advice on that page today, you would be in very bad shape. Additionally back in 2002 there were very few of the non traded type. Even in 2008, there were only about 40 of the non traded REITs so you should take care to always read the dates on any articles you are reading online.

If you are interested in getting a current list of REITs, both of the traded and non traded varieties, you can contact most investment firms and especially any of the real estate investment firms. In a time then the real estate market is low, if may be something to research if you are looking to buy. With any investment, even with the best and most accurate list of REITs, you are taking a chance and things can change all the time.

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