DEFINITION of 'Non-Traded REIT'

A form of real estate investment method that is designed to reduce or eliminate tax while providing returns on real estate. A non-traded REIT does not trade on a securities exchange, and because of this it is quite illiquid for long periods of time. Front-end fees can be as much as 15%, much higher than a traded REIT due to its limited secondary market.

BREAKING DOWN 'Non-Traded REIT'

Early redemption of a non-traded REIT can result in high fees that can lower the total return. Like exchange-traded REITs, non-traded REITs are subject to the same IRS requirements, which include returning at least 90% of taxable income to shareholders. Investors tend to seek exchange-traded and non-traded REITs for their income distribution.

RELATED TERMS
  1. Real Estate Investment Trust - ...

    A REIT is a type of security that invests in real estate through ...
  2. REIT ETF

    Exchange-traded funds that invest the majority of assets in equity ...
  3. Funds Available For Distribution ...

    An informal measure of the amount of capital that is on hand ...
  4. Captive Real Estate Investment ...

    A real estate investment trust (REIT) that is controlled by a ...
  5. Finite-Life REIT - FREIT

    A real estate investment trust (REIT) that aims to sell its real ...
  6. Funds From Operations Per Share ...

    A metric for the performance of a real estate investment trust ...
Related Articles
  1. Financial Advisor

    Non-Traded REITs: Risks and Rewards

    An overview of the risks and rewards of non-traded REITs and how they compare to exchange-traded REITs.
  2. Investing

    Eyeing REITs? Consider these Risks

    REITs are a great way to invest in real estate without all the drama and headaches. That said, there are risks.
  3. Investing

    REITs 101: How They're Regulated

    Here's everything you need to know about REITs in less than five minutes.
  4. Financial Advisor

    Why Advisors Love this Non-Traded REIT

    A new type of non-traded REIT is attracting advisors and investors. This is a breakdown of the unique way in which the REIT makes money.
  5. Investing

    REITs vs. REIT ETFs: How They Compare

    Learn about the difference in investing in a REIT for a single real estate company versus investing in a REIT ETF that tracks a larger REIT index.
  6. Investing

    Are REITs Beneficial During A High-Interest Era?

    Amid expectations of high interest rates, do REITs offer a viable investment option? Investoepdia studies the historical data to decide.
  7. Financial Advisor

    REITs: Why They're So Hot Right Now

    They've been substantially outperforming both stocks and bonds for the past several months.
  8. Financial Advisor

    REITs: Still a Viable Investment?

    Are REITs viable investments now? Here's a look at the history of REITs' performance during rocky economic times and other factors that may impact returns.
  9. Investing

    What To Expect From REITs In 2014

    While REITs will face a number of challenges in 2014, one particular issue will be the focus of investors: rising interest rates.
  10. Investing

    What Is a REIT and Does It Belong in My Portfolio?

    Real estate investment trusts offer a unique way for investors to own a real estate portfolio without the risks of owning single properties.
RELATED FAQS
  1. What are the potential pitfalls of owning REITs?

    Learn about pitfalls to investing in REITs, such as investors having to pay income tax, the REIT having to pay property tax ... Read Answer >>
  2. What are the pros and cons of owning an equity REIT versus a mortgage REIT? (AEC, ...

    Learn about investing in equity, mortgage and hybrid REITs. Explore the different strategies REITs employ to generate income ... Read Answer >>
  3. What is the difference between an Equity REIT and a Mortgage REIT?

    Find out more about real estate investment trusts and the main differences between equity and mortgage real estate investment ... Read Answer >>
  4. Can mutual funds invest in REITs?

    Learn about mutual funds that invest in real estate investment trusts and have their shares traded on major U.S. stock exchanges ... Read Answer >>
  5. Is NAV the best way to assess the value of an REIT?

    Examine and understand the usefulness of net asset value as an accurate metric with which to assess the value of a REIT investment. Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center