Non-traded REITs (Real Estate Investment Trusts) are financial vehicles that allow retail investors to access real estate investments that are not available through the public stock exchange. By pooling investor money, large deals can be funded and the underlying real estate can be acquired and managed in a cost effective way. Unlike their exchange traded counterparts, non-traded REITs are not listed on public exchanges and are not required to meet the same liquidity requirements as listed REITs.

Non-traded REITs offer investors access to commercial real estate including office buildings, apartments, shopping centers, medical centers, industrial sites, and hotels. The underlying assets are structured as diversified portfolios with assets spread across different markets and property types. Investors can benefit from the diversified portfolio and more stable returns when the assets are managed by experienced professionals.

The key benefits of non-traded REITs are the potential for higher returns along with the additional tax benefits associated with investing in real estate. Non-traded REITs give investors the same tax incentives as exchange-traded REITs, including lower capital gains taxes and deducting losses from income on their Schedule E. As with all investments, investors should research the potential risks associated with non-traded REITs. Since non-traded REITs are not listed on public exchanges and are not required to meet the same liquidity requirements as listed REITs, investors should be aware of the potential lack of liquidity of these investments.

Despite not being listed on public exchanges, Non-traded REITs must still be registered with the Securities and Exchange Commission and are required to make regular, periodic regulatory filings. Similar to exchange-traded REITs, they are also subject to the IRS requirements that include returning at least 90% of taxable income to shareholders. Maximum offering periods typically range between 1 and 3 years and range in size from $50 million to over $2 billion.

Overall, non-traded REITs can provide investors with a unique way to invest in commercial real estate, with potential significant benefits. With careful consideration of the risks and rewards, investors can structure a well-diversified portfolio that generates returns with some tax advantages.