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You are here: Home / What Is A Non-Traded Real Estate Investment Trust (REIT)

What Is A Non-Traded Real Estate Investment Trust (REIT)

Parkway Plaza - Dallas, Texas

Parkway Plaza – Dallas, Texas

A non-traded REIT is a form of real estate investment tool that can reduce taxes by providing potential distributions that are partially tax favored. Non-traded REITs are typically owned by a company that owns and operates income-producing real estate, or related assets.

These assets may include commercial office buildings, shopping malls, multi-family housing, hotels/motels, resort property, warehouses, and mortgages. Unlike many real estate companies, a non-traded REIT does not develop real estate properties for resale. Instead, a non-traded REITs buy and develop property primarily to operate them as part of its own investment portfolio.

Three Types of REITs

Non-Traded REITs

All non-traded REITs are governed by the Securities and Exchange Commission and the Internal Revenue Service. To operate a non-traded REIT, you must be a taxable corporation, managed by a board of directors. At least 75% of the assets held must be real estate investments, and there must be at least 100 shareholders. The key component of a non-traded REIT is that it is required to pay at least 90% of taxable income to its shareholders. The potential distributions make non-traded REITs appealing to long term investors or they are looking for tax favored treatment of dividends.

Equity REITs

Equity REITs make up about 90% of the REIT investing market. An Equity REIT own and operate the real estate properties that are included in the REIT they are investing in. An Equity REIT is typically not sold for profit. Money is paid to investors from the rent made from the rental property.

Mortgage REITs

Mortgage REITs are a less common type of real estate investment trust. Mortgage REITs borrow money at short term interest rates, and then loans those dollars to the owners and operators of real estate. The Mortgage REIT makes money on the interest accrued from these loans.

Investing in non-traded REITs, like Hartman vREIT XXI, Inc., involves a high degree of risk. You should carefully review the “Risk Factors” section of the prospectus for Hartman vREIT XXI, Inc., which contains a detailed discussion of the material risks that you should consider before you invest in shares of our common stock.

Equity REITs may be affected by changes in the value of the underlying property owned by the trust, while mortgage REITs may be affected by the quality of any credit extended. Such investments are subject to some of the risks associated with direct ownership of real estate, including market value declines, risks related to general and local economic conditions and increases in interest rates. Investing in special sectors, such as real estate, can be subject to different and greater risks than more diversified investing.

Investing in real estate is a profitable business. If you are a self-employed real estate investor who is willing to add properties to your portfolio, contact us to learn more.

REIT Investing Education

What is a NON-Traded REIT
How NON-Traded REITs Work
Who Should Invest in REITs
Taxes and REIT Investment
REIT Investing Terms

Contact us

Hartman Income REIT
2909 Hillcroft, Suite 420
Houston, Texas 77057
713-467-2222
800-880-2212
Check the background of this firm on FINRA’s BrokerCheck.

Recent Press

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  • Hartman Short Term Income Properties XX, Inc. Announces Fourth Quarter Distributions for Shareholders
  • Hartman vREIT XXI, Inc. Announces Fourth Quarter Distributions for Shareholders

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The contents of this website constitute neither an offer to sell nor a solicitation of an offer to buy any security; offers can be made only by the prospectus. This material must be read in conjunction with the prospectus in order to fully understand all of the implications and risks of the offering of securities to which it relates. A copy of the prospectus must be made available to you in conjunction with the offering described herein. No offering is made except by a prospectus filed with the Department of Law of the State of New York. Neither the Attorney General of the State of New York nor any other state regulators have passed on or endorsed the merits of this offering. Any representation to the contrary is unlawful.
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