Page 18 - IreitEbook

While this benefit does hold true for

PNLRs, privately traded REITs have Ever since the Financial Industry

no such requirements. As such, they Regulatory Authority, or FINRA,

can be run by ethical, reasonable, and addressed the matter in 2015,

competent people. Or they may not management does have to directly

be. address those additional expenses.

Either way, it’s more difficult for They can’t bury it like they did

investors to determine what they’ve before. However, those additional

really gotten themselves into. expenses still do exist.

Cost: What isn’t at all difficult is
WHY NOT INVEST
determining that private REITs and
IN PUBLICLY
PNLRs come with profit-sucking fees.
TRADED REITS?

These entities are almost always

externally advised and externally

managed, which means they’re more Then there are publicly-traded REITs,

expensive to run. For their legal the vast majority of which operate

owners, at least, it’s a tradeoff between with their own in-house advisors

time and expertise expenditures vs. and managers. So when you buy

money spent. And the way they look into them, those costs have already

at it, it’s worthwhile to cut into their been factored in.

financial intake. Moreover, they’re

not necessarily wrong about that

assessment.

That’s because they’re not the ones

who end up paying the price of that

decision. Investors do through a series

of fees. There can be upfront fees of

12% or more once you factor in buying

and managing properties, and paying

involved advisors. 18