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  Real Estate Investment Trusts (REITs)
  
  What are REITs?
  
  Property investment trusts (" REITs") enable people to buy large-scale, income-producing genuine estate. A REIT is a company that owns and typically runs income-producing genuine estate or associated assets. These may consist of office structures, shopping malls, houses, hotels, resorts, self-storage facilities, storage facilities, and mortgages or loans. Unlike other property companies, a REIT does not develop real estate residential or commercial properties to resell them. Instead, a REIT buys and develops residential or commercial properties mainly to operate them as part of its own investment portfolio.
  
  Why would somebody buy REITs?
  
  REITs offer a method for specific investors to make a share of the income produced through industrial property ownership - without actually needing to go out and buy commercial genuine estate.
  
  What types of REITs are there?
  
  Many REITs are signed up with the SEC and are openly traded on a stock market. These are referred to as openly traded REITs. Others might be registered with the SEC but are not openly traded. These are referred to as non- traded REITs (also known as non-exchange traded REITs). This is one of the most crucial distinctions amongst the numerous type of REITs. Before purchasing a REIT, you should comprehend whether it is openly traded, and how this might affect the benefits and risks to you.
  
  What are the benefits and threats of REITs?
  
  REITs use a method to consist of property in one's investment portfolio. Additionally, some REITs may offer 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 exchange, non-traded REITs involve special dangers:
  
  Lack of Liquidity: Non-traded REITs are illiquid financial investments. They usually can not be offered readily on the free market. If you need to sell an asset to raise cash rapidly, you may not be able to do so with shares of a non-traded REIT. Share Value Transparency: While the marketplace cost of a publicly traded REIT is readily available, it can be tough to figure out the worth of a share of a non-traded REIT. Non-traded REITs typically do not supply an estimate of their worth per share up until 18 months after their offering closes. This might be years after you have made your investment. As an outcome, for a considerable time period you may be not able to evaluate the value of your non-traded REIT investment and its volatility. Distributions May Be Paid from Offering Proceeds and Borrowings: Investors may be brought in to non-traded REITs by their fairly high dividend yields compared to those of openly traded REITs. Unlike openly traded REITs, however, non-traded REITs often pay distributions in excess of their funds from operations. To do so, they might use providing earnings and loanings. This practice, which is normally not used by openly traded REITs, minimizes the value of the shares and the money offered to the business to acquire extra . Conflicts of Interest: Non-traded REITs typically have an external supervisor instead of their own employees. This can lead to possible disputes 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 possessions under management. These fee rewards might not necessarily line up with the interests of shareholders.
  
  How to purchase and sell REITs
  
  You can invest in an openly traded REIT, which is noted on a major stock market, by buying shares through a broker. You can purchase shares of a non-traded REIT through a broker that takes part in the non-traded REIT's offering. You can also buy shares in a REIT mutual 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 charges will apply.
  
  Non-traded REITs are typically offered by a broker or monetary adviser. Non-traded REITs generally have high up-front charges. Sales commissions and upfront offering charges normally 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 a minimum of 100 percent of their taxable earnings to their shareholders. The shareholders 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 usually are dealt with as regular earnings and are not entitled to the lowered tax rates on other kinds of business dividends. Consider consulting your tax advisor before purchasing REITs.
  
  Avoiding scams
  
  Watch out for anyone who tries to offer REITs that are not signed up with the SEC.
  
  You can verify the registration of both publicly traded and non-traded REITs through the SEC's EDGAR system. You can likewise use EDGAR to evaluate a REIT's annual and quarterly reports along with any offering prospectus. For more on how to use EDGAR, please see Research Public Companies.
  
  You should likewise take a look at the broker or financial investment consultant who advises buying a REIT. To find out how to do so, please visit Dealing with Brokers and Investment Advisers.
  
  Additional details
  
  SEC Investor Bulletin: Real Estate Investment Trusts (REITs)
  
  FINRA Investor Alert: Public Non-Traded REITs - Perform a Careful Review Before Investing
  
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