commit 36bd4c3d66da718b832c60ae081f55fbe7fbbc62 Author: Pearline Bourne Date: Fri Jun 13 03:53:25 2025 +0900 Update 'Real Estate Investment Trusts (REITs).' diff --git a/Real-Estate-Investment-Trusts-%28REITs%29..md b/Real-Estate-Investment-Trusts-%28REITs%29..md new file mode 100644 index 0000000..333af91 --- /dev/null +++ b/Real-Estate-Investment-Trusts-%28REITs%29..md @@ -0,0 +1,153 @@ +
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Real Estate Investment Trusts (REITs)
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What are REITs?
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Real estate investment trusts (" REITs") allow individuals to purchase massive, income-producing property. A REIT is a company that owns and typically runs income-producing genuine estate or associated properties. These might include workplace structures, going shopping malls, apartment or condos, hotels, resorts, [self-storage](https://www.ilfarmandrecland.com) facilities, storage facilities, and mortgages or loans. Unlike other real estate business, a REIT does not establish realty residential or commercial properties to resell them. Instead, a REIT purchases and establishes residential or commercial properties primarily to operate them as part of its own financial investment portfolio.
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Why would somebody buy REITs?
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REITs provide a method for individual financiers to earn a share of the income produced through commercial realty ownership - without actually needing to go out and buy commercial genuine estate.
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What types of REITs exist?
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Many REITs are signed up with the SEC and are publicly traded on a stock market. These are referred to as openly traded REITs. Others might be signed up with the SEC however are not publicly traded. These are understood as non- traded REITs (also called non-exchange traded REITs). This is one of the most [crucial differences](https://movingsoon.co.uk) among the various type of REITs. Before purchasing a REIT, you need to [comprehend](https://ghurairproperties.com) whether it is openly traded, and how this could affect the benefits and threats to you.
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What are the benefits and risks of REITs?
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REITs offer a method to include realty in one's financial investment portfolio. Additionally, some REITs may use greater dividend yields than some other financial investments.
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But there are some threats, especially with non-exchange traded REITs. Because they do not trade on a stock market, non-traded REITs include [special](https://bomja.ir) threats:
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Lack of Liquidity: Non-traded REITs are illiquid investments. They usually can not be [offered](https://alkojak.com) easily on the free market. If you require to sell an asset to raise cash quickly, you may not be able to do so with shares of a non-traded REIT. +Share Value Transparency: While the market price of a publicly traded REIT is readily available, it can be hard to [determine](https://lucasluxurygroups.com) the worth of a share of a non-traded REIT. Non-traded REITs normally do not offer a price quote of their worth per share until 18 months after their offering closes. This may be years after you have made your investment. As a result, for a considerable period you might be unable to examine the value of your non-traded REIT investment and its volatility. +Distributions May Be Paid from Offering Proceeds and Borrowings: Investors may be attracted to non-traded REITs by their fairly high dividend yields compared to those of openly traded REITs. Unlike openly traded REITs, nevertheless, non-traded REITs often pay circulations in excess of their funds from operations. To do so, they may utilize offering profits and borrowings. This practice, which is generally not used by publicly traded REITs, minimizes the worth of the shares and the money readily available to the company to buy additional assets. +Conflicts of Interest: Non-traded REITs normally have an external supervisor rather of their own workers. This can result in potential disputes of interests with investors. For example, the REIT may pay the external supervisor considerable charges based upon the quantity of residential or commercial property acquisitions and assets under management. These charge incentives might not always line up with the interests of investors.
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How to purchase and sell REITs
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You can purchase a publicly traded REIT, which is listed on a significant stock exchange, by acquiring shares through a broker. You can buy shares of a non-traded REIT through a broker that gets involved in the non-traded REIT's offering. You can likewise buy shares in a REIT mutual fund or REIT exchange-traded fund.
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Understanding charges and taxes
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Publicly traded REITs can be purchased through a broker. Generally, you can purchase the typical stock, chosen stock, or debt security of an openly traded REIT. Brokerage fees will use.
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Non-traded REITs are generally offered by a broker or financial advisor. Non-traded REITs typically have high up-front fees. Sales commissions and upfront offering costs generally amount to approximately 9 to 10 percent of the investment. These expenses lower the value of the investment by a significant amount.
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Special Tax Considerations
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Most REITS pay a minimum of one hundred percent of their taxable income to their investors. The investors of a REIT are accountable for paying taxes on the dividends and any capital gains they receive in connection with their investment in the REIT. Dividends paid by REITs normally are treated as ordinary income and are not entitled to the decreased tax rates on other kinds of business dividends. Consider consulting your tax consultant before buying REITs.
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Avoiding fraud
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Be cautious of any person who tries to sell REITs that are not registered with the SEC.
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You can verify the registration of both openly traded and non-traded REITs through the SEC's EDGAR system. You can also use EDGAR to examine a REIT's yearly and quarterly reports as well as any offering prospectus. For more on how to use EDGAR, please go to Research Public Companies.
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You need to likewise examine out the broker or investment advisor who suggests buying a REIT. To learn how to do so, please check out Working with Brokers and Investment Advisers.
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Additional info
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SEC Investor Bulletin: Real Estate [Investment Trusts](https://leonisinmobiliaria.com) (REITs)
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FINRA Investor Alert: Public Non-Traded REITs - Perform a Careful Review Before Investing
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