what is a non traded reit 
non traded reits are not listed on public exchanges and can provide retail investors access to inaccessible real estate investments with tax benefits understanding non traded reitsa non traded reit is 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 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 the expectation of any reit is that the investor will eventually see income from its real estate portfolio with rent being the most common source of income the types of properties that a non traded reit invests in early on might be unknown to the investors and the initial property acquisitions might be made through a blind pool where the investors do not know the specific properties that are being added to the program s portfolio 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 that include returning at least 90 of taxable income to shareholders investors tend to seek exchange traded and non traded reits for their income distribution despite not being listed on any national securities exchanges non traded reits must still be registered with the securities and exchange commission sec they are also required to make regular periodic regulatory filings this includes quarterly and annual reports as well as filing a prospectus non traded reits could remain illiquid for years after their inception because they are not traded on national exchanges and may not have a steady income at the beginning periodic distributions to shareholders of non traded reits may be largely subsidized by borrowed funds such distributions are not guaranteed to be paid and may exceed the reit operating cash flow the board of directors for the non traded reit can decide whether or not to pay distribution and what amount will be given when a non traded reit is just getting started its earliest distributions might come entirely from the capital the investors put into it many non traded reits are structured with a built in finite time frame before which one of two actions must be taken at the end of the period the non traded reit must either become listed on a national exchange or must liquidate the value of the investment made into such a reit could have decreased or become worthless at the time the program is liquidated 