Beware of Non-Traded REITs

Nontraded REITs:

–          typically report their estimated share value only once every 12 to 18 months

–          pay yields of 5% or more, although much of that may come from borrowed money or out of the investors’ original capital

–          the capital gains—or losses—are delayed, you’ll still be exposed to the underlying performance of the properties

–          underperformed a comparable sample of publicly traded REITs by an annual average of 1.4 percentage points between 1990 and 2011

–          it costs 8% or more in upfront commissions to buy the typical nontraded REIT. By contrast, you can buy an index fund of public REITs at no commission and with annual fees as low as 0.1%.

 

Source:

Protecting Your Bucket (WSJ)

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s