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Non Traded real estate trust

Old 04-29-2011, 03:55 PM
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Default Non Traded real estate trust

Anyone know about or have opinions on Non-Traded real estate investment trust?
My advisor is wanting me to add one to my account.
Old 04-29-2011, 04:10 PM
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Run. Google the name of the REIT and see how many lawsuits you can find. Many investors are stuck with these things while the dividends have been cut. Several are in a position where the dividend has been stopped, and the Company discontinued their redemption program unless the owner died.

Commission on these things are around 7%. If you want a real estate investment security for your portfolio, buy an Exchange Traded Fund invested in an index of REITS or an inexpensive REIT mutual fund.
Old 04-29-2011, 04:12 PM
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I'll also add to check your advisor out at www.finra.org. If he's pushing products like this I wouldn't be surprised to find formal complaints.
Old 04-29-2011, 04:41 PM
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Originally Posted by Sprockets View Post
Run. Google the name of the REIT and see how many lawsuits you can find. Many investors are stuck with these things while the dividends have been cut. Several are in a position where the dividend has been stopped, and the Company discontinued their redemption program unless the owner died.

Commission on these things are around 7%. If you want a real estate investment security for your portfolio, buy an Exchange Traded Fund invested in an index of REITS or an inexpensive REIT mutual fund.

Thanks,
I found an article dated 4-8-11. It looks like I will pass on this one.
http://www.crenews.com/index.php?opt...104&Itemid=128
Old 04-29-2011, 07:03 PM
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Originally Posted by Sprockets View Post
. If you want a real estate investment security for your portfolio, buy an Exchange Traded Fund invested in an index of REITS or an inexpensive REIT mutual fund.
I have bought into two REIT stocks that I own for about twenty years now. One just reached an all time high this week and the other is very stable. They both pay consistently high dividends.
Old 04-29-2011, 07:15 PM
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Originally Posted by the good life View Post
I have bought into two REIT stocks that I own for about twenty years now. One just reached an all time high this week and the other is very stable. They both pay consistently high dividends.
The key is liquidity. You could sell those any time. I have a fair amount of HCP in client accounts. It did hit a high this week. This is not a recommendation in any way. If the non-traded REITS have trouble, there is no/limited market for the shares.
Old 04-30-2011, 04:39 AM
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Originally Posted by Sprockets View Post
Run. Google the name of the REIT and see how many lawsuits you can find. Many investors are stuck with these things while the dividends have been cut. Several are in a position where the dividend has been stopped, and the Company discontinued their redemption program unless the owner died.

Commission on these things are around 7%. If you want a real estate investment security for your portfolio, buy an Exchange Traded Fund invested in an index of REITS or an inexpensive REIT mutual fund.
X2. I had a financial advisor who tried to sell me $250K worth of such an investment just before the real estate crash- thank goodness I said no. Advisors love the up-front commissions, what happens later is your problem. I followed this REIT investment through people who bought in and it did exactly what Sprocket described- lost share value, cut dividend, no redemption unless you die.
Old 04-30-2011, 04:49 AM
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Originally Posted by BarryD View Post
Anyone know about or have opinions on Non-Traded real estate investment trust?
My advisor is wanting me to add one to my account.
Sounds like you don't have an advisor you have a salesman.......
Old 04-30-2011, 05:20 AM
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Originally Posted by xl883lo View Post
Sounds like you don't have an advisor you have a salesman.......
He has not been pushing it. Just brought it up in a review last week. I'm sure he would like the commission though.

I'm not wild about the idea of not being able to sell if it goes south.
Old 04-30-2011, 05:35 AM
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I'm going to add to this since the reaction is unanimous.

I'll go out on a limb and suggest that 99% of the advisors who push these understand maybe 10% of how the products really work. They don't read the prospectus where the nuts and bolts are. They are trained to sell.

Here's a recent experience that blew me away. A client's mother passed away and 40% of her portfolio consisted of 1 non-traded REIT. The mother also owned a significant parcel of commercial land, making this investment unsuitable as it had her even less diversified. The advisor was planning to split the product between my client and her brother. As yarcraft mentioned above, the sponsor had cut back the redemption program and cut the dividend.

I took the initiative to read the prospectus and redemption program and found an exception in the case of the death of an account holder. The exception allowed the mother's Estate to redeem the shares at 100% of the original purchase price. The advisor had no idea the exception existed. The original cost was over $450K, making my client and her brother quite happy.

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