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- About 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
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  Breadcrumb
  
  1. Home.

2. Introduction to Investing.
3. Investment Products
   
   Main navigation
   
   - Save and Invest - Define Your Goals.

• Diversify Your Investments.
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• Gauge Your Risk Tolerance. - Discover Investment Options.
• Pay Off Credit Cards or Other High Interest Debt.
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• Small Savings Add Up to Big Money.
• Understand What It Means to Invest
  
  - Public Companies.
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• Kinds of Orders.
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  - Auction Rate Securities.
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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?
  
  Real estate investment trusts (" REITs") enable individuals to purchase massive, income-producing realty. A REIT is a company that owns and usually runs income-producing realty or related possessions. These might consist of workplace buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans. Unlike other realty companies, a REIT does not develop property residential or commercial properties to resell them. Instead, a REIT buys and develops residential or commercial properties mostly to run them as part of its own investment portfolio.
  
  Why would somebody buy REITs?
  
  REITs supply a way for private financiers to make a share of the earnings produced through business realty ownership - without actually having to go out and buy commercial real estate.
  
  What kinds of REITs exist?
  
  Many REITs are signed up with the SEC and are publicly traded on a stock market. These are called openly traded REITs. Others might be signed up with the SEC however are not publicly traded. These are known as non- traded REITs (also referred to as non-exchange traded REITs). This is one of the most important differences among the numerous sort of REITs. Before buying a REIT, you should comprehend whether it is openly traded, and how this might affect the benefits and threats to you.
  
  What are the benefits and risks of REITs?
  
  REITs use a method to include property in one's 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 involve unique dangers:
  
  Lack of Liquidity: Non-traded REITs are illiquid financial investments. They normally can not be sold easily on the free market. If you need to sell a property to raise cash quickly, you may not be able to do so with shares of a non-traded REIT. Share Value Transparency: While the marketplace 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 quote of their worth per share up until 18 months after their offering closes. This might be years after you have made your financial investment. As a result, for a substantial period you may be unable to examine the value of your non-traded REIT financial investment and its volatility. Distributions May Be Paid from Offering Proceeds and Borrowings: Investors may be drawn in 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 frequently pay distributions in excess of their funds from operations. To do so, they may utilize providing profits and borrowings. This practice, which is typically not used by openly traded REITs, lowers the value of the shares and the money readily available to the business to buy extra assets. Conflicts of Interest: Non-traded REITs typically have an external supervisor rather of their own staff members. This can cause potential disputes of interests with investors. For example, the REIT may pay the external manager significant costs based on the amount of residential or commercial property acquisitions and properties under management. These charge rewards might not always line up with the interests of shareholders.
  
  How to buy and offer REITs
  
  You can invest in an openly traded REIT, which is listed on a major stock exchange, by acquiring shares through a broker. You can purchase shares of a non-traded REIT through a broker that gets involved in the non-traded REIT's offering. You can also purchase shares in a REIT shared fund or REIT exchange-traded fund.
  
  Understanding charges and taxes
  
  Publicly traded REITs can be acquired through a broker. Generally, you can buy the typical stock, chosen stock, or debt security of an openly traded REIT. Brokerage costs will apply.
  
  Non-traded REITs are usually sold by a broker or monetary consultant. Non-traded REITs generally have high up-front fees. Sales commissions and in advance offering charges typically amount to approximately 9 to 10 percent of the investment. These costs lower the value of the investment by a substantial amount.
  
  Special Tax Considerations
  
  Most REITS pay out at least 100 percent of their taxable income to their shareholders. The investors of a REIT are accountable for paying taxes on the dividends and any capital gains they get in connection with their investment in the REIT. Dividends paid by REITs normally are dealt with as ordinary earnings and are not entitled to the lowered tax rates on other types of business dividends. Consider consulting your tax adviser before purchasing REITs.
  
  Avoiding fraud
  
  Be wary of anyone who tries to sell REITs that are not registered with the SEC.
  
  You can verify the registration of both publicly traded and non-traded REITs through the SEC's EDGAR system. You can also utilize EDGAR to review a REIT's yearly and quarterly reports as well as any offering prospectus. For more on how to utilize EDGAR, please check out Research Public Companies.
  
  You need to also take a look at the broker or financial investment advisor who suggests buying a REIT. To find out how to do so, please check out Dealing with Brokers and Investment Advisers.
  
  Additional information
  
  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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