Non-Traded REITs vs. Publicly Traded REITs

A non-traded REIT is a Real Estate Investment Trust that is registered with the SEC but not listed on a stock exchange. Like a publicly traded REIT, it owns or finances income-producing real estate, follows the REIT qualification rules (including distributing at least 90% of its taxable income), and pays dividends. The difference is that its shares don't trade on an exchange, so you can't buy or sell them throughout the day at a market price. Instead, a non-traded REIT sells shares at a price tied to net asset value (NAV) and provides only limited liquidity through a redemption program rather than an exchange. Because they aren't listed, non-traded REITs are offered through broker-dealers and generally require accredited or otherwise suitable investors, with a suitability review first. They're designed for longer-term investors who want real estate income and are comfortable with illiquidity. So a non-traded REIT is the unlisted, illiquid counterpart to a publicly traded REIT.

The main difference is liquidity and pricing. A publicly traded REIT is listed on an exchange, so you can buy or sell shares throughout the day at a transparent market price — immediate liquidity and continuous, visible pricing. A non-traded REIT isn't exchange-listed, so it's priced periodically at net asset value (NAV) rather than continuously by the market, and liquidity comes only through a redemption program that's typically capped (commonly around 5% per year) and can be suspended. So a publicly traded REIT is liquid and market-priced, while a non-traded REIT is illiquid and NAV-priced. This core difference shapes the others — fees (generally lower for traded, historically higher for non-traded), volatility (real-time for traded, smoother NAV for non-traded), and suitability (broadly available for traded, gated for non-traded). So the structures differ most in how you hold them and access your capital.

Yes — non-traded REITs are illiquid. Because their shares aren't listed on an exchange, you can't simply sell them whenever you want at a market price. Liquidity comes only through the REIT's redemption program, which is typically capped (commonly around 5% of shares per year) and can be reduced or suspended at the REIT's discretion, particularly during periods of market stress when many investors want to redeem at once. So you generally can't count on accessing your capital on demand — you may have to wait for a redemption window, and even then redemptions may be limited or paused. This illiquidity is a defining feature of non-traded REITs and the main reason they suit only longer-term investors who don't need ready access to their money. So if you might need your capital in the near or medium term, a non-traded REIT is generally not appropriate — its illiquidity is a real constraint, not a technicality. Confirm the redemption terms before investing.

Non-traded REITs are priced periodically at net asset value (NAV) rather than continuously by a market. NAV is an estimate of the per-share value of the REIT's underlying real estate (and other assets), calculated periodically — often monthly, quarterly, or at set intervals — using appraisals and valuation methods. So instead of a continuously updating market price set by supply and demand, a non-traded REIT reports a periodic NAV. This makes the value appear smoother and less volatile than an exchange-listed REIT's price, but it's important to understand that the NAV is an estimate and may lag actual market conditions — the underlying real estate can change in value between valuations. By contrast, a publicly traded REIT's price is set continuously by the market, reflecting real-time sentiment and conditions. So non-traded REIT pricing is periodic and appraisal-based (NAV), while traded REIT pricing is continuous and market-based. Understand that smoother NAV pricing doesn't mean less underlying risk.

Historically, yes — non-traded REITs have generally carried higher fees than publicly traded REITs. Non-traded REITs have typically involved higher upfront costs, including selling commissions, dealer-manager fees, and organizational and offering expenses, which can meaningfully reduce the portion of your investment that's initially deployed into real estate. Ongoing fees, such as asset-management fees, may also apply. By comparison, publicly traded REITs are generally low-cost to own — you buy shares through a brokerage account (often commission-free), and REIT funds or ETFs charge only a modest expense ratio, with no large upfront loads. While some newer non-traded REIT structures have worked to reduce certain costs, the overall fee load on non-traded REITs has generally remained higher. Because fees affect your net returns, this is an important factor to weigh. So review the fee structure of any non-traded REIT carefully and understand how it compares to a lower-cost traded alternative before investing.

They appear less volatile, but that doesn't necessarily mean they're less risky. A publicly traded REIT's price is set continuously by the market, so it reflects investor sentiment, interest-rate expectations, and broad market swings — and can fall sharply during a sell-off even when the underlying properties are stable, making it visibly volatile day to day. A non-traded REIT is valued periodically at NAV rather than continuously, so its reported value doesn't bounce around daily and looks smoother. But this smoothness is largely a function of infrequent valuation, not an absence of underlying risk — the real estate can still lose value, and the NAV is an estimate that may lag reality. So lower reported volatility reflects how the value is measured, not necessarily lower risk. So don't mistake a non-traded REIT's smoother NAV for safety; both structures own real estate that carries real risk, just measured and reported differently. Set expectations accordingly.

Non-traded and private REITs are typically available only to accredited or otherwise suitable investors, and they're offered through a broker-dealer rather than purchased on an exchange. Before you invest, a suitability review considers your financial situation, investment goals, liquidity needs, and risk tolerance to determine whether an illiquid, longer-term non-traded REIT is appropriate for you. Many non-traded REITs also have investment minimums. This gatekeeping reflects the illiquidity, complexity, and historically higher fees of non-traded structures — they're not meant for capital you might need in the near term. By contrast, publicly traded REITs are available to virtually any investor through an ordinary brokerage account, with no special qualification. So access differs: traded REITs are broadly available and self-directed, while non-traded REITs are gated, advisor-assisted, and aimed at longer-term, suitable investors. So if you're considering a non-traded REIT, expect a suitability review and confirm you meet the requirements.

Neither is universally better — the right choice depends on your goals, time horizon, and need for liquidity. A publicly traded REIT tends to suit investors who value liquidity, transparency, and low cost, and who can tolerate short-term market volatility — you can exit any trading day at a market price and add real estate exposure cheaply. A non-traded REIT tends to suit longer-term income investors who don't need liquidity, are comfortable committing capital for an extended period, and want real estate exposure that isn't marked to market daily, accepting historically higher fees and illiquidity in exchange. Because non-traded REITs are illiquid and costlier, they're generally appropriate only as part of a portfolio and only for capital you can leave invested, after a suitability review confirms the fit. So match the structure to your situation: traded for liquidity and low cost, non-traded for a longer-term, less-frequently-priced income holding. There's no one-size-fits-all answer.

Generally no — you can't sell a non-traded REIT on demand the way you can sell a publicly traded REIT. Because non-traded REIT shares aren't listed on an exchange, your main avenue for liquidity is the REIT's redemption program, which lets you request that the REIT buy back your shares — but these programs are typically capped (commonly around 5% of shares per year) and can be reduced or suspended at the REIT's discretion, especially during stressed markets when many investors want out simultaneously. So even when a redemption window is open, your request may be limited or unfulfilled, and you may have to wait. There may also be early-redemption discounts or holding-period requirements. So plan to hold a non-traded REIT for the long term and treat it as illiquid capital — don't count on being able to exit quickly or at a price you control. Review the specific redemption terms in the offering documents before investing, and confirm they fit your liquidity needs.

Yes — both non-traded and publicly traded REITs must follow the same core REIT qualification rules to enjoy REIT tax treatment. Both must distribute at least 90% of their taxable income to shareholders annually (the 90% rule), hold at least 75% of assets in real estate, cash, or government securities, derive at least 75% of gross income from real estate sources, have at least 100 shareholders, and not be closely held (the 5/50 rule). A qualifying REIT — traded or non-traded — avoids corporate-level income tax, so income is taxed mainly at the shareholder level. So the fundamental REIT structure and tax rules are the same for both. What differs is not the REIT rules themselves but how the REIT is held and accessed: listing (exchange vs. unlisted), liquidity (daily vs. capped redemptions), pricing (market vs. periodic NAV), fees, and volatility. So both are 'real REITs' under the tax code; the differences are structural, not in the qualification requirements they must meet.

Non-traded REIT dividends are taxed the same way as publicly traded REIT dividends, because both are REITs under the tax code. Most REIT ordinary dividends are taxed as ordinary income rather than at the lower qualified-dividend rates, since the REIT paid no corporate tax. However, a 20% deduction under Section 199A applies to qualified REIT dividends, lowering the effective top federal rate on those dividends to roughly 29.6%; the 199A deduction was made permanent by the 2025 OBBBA. Some distributions may be classified as return of capital (which reduces your cost basis rather than being currently taxed) or as capital-gain distributions (taxed at capital-gains rates). The REIT reports the breakdown to you on Form 1099-DIV. So the tax treatment doesn't depend on whether the REIT is traded or non-traded — it depends on the character of the distributions. Baker 1031 doesn't provide tax advice; verify the current rules and your specific treatment with your tax advisor, as the details can be technical.

Investors sometimes choose a non-traded REIT for a few reasons. First, the periodic NAV pricing means the value isn't marked to market daily, so the investment doesn't show the day-to-day swings of an exchange-listed REIT — some longer-term investors prefer not to watch (or react to) daily volatility. Second, non-traded REITs are designed as longer-term income holdings, which can fit investors who don't need liquidity and want a steady distribution from real estate. Third, some non-traded REITs offer access to particular strategies, sponsors, or property types not easily replicated in the public market. The trade-offs are significant, though: illiquidity, historically higher fees, periodic (not continuous) pricing, and a suitability gate. So a non-traded REIT can make sense for a longer-term, suitable investor who values these features and accepts the trade-offs — but it's not a free lunch. So the choice should follow from your goals and a suitability review, not from assuming non-traded automatically means safer or better.

Not necessarily — visible volatility isn't the same as higher fundamental risk. A publicly traded REIT's price moves continuously with the market, so it shows real-time volatility and can drop during sell-offs even when the underlying properties and rents are stable. A non-traded REIT, valued periodically at NAV, looks smoother — but that smoothness comes from infrequent valuation, not from owning safer real estate. Both structures own (or finance) real estate that carries the same kinds of underlying risk: rents can fall, occupancy can drop, property values can decline, and interest rates can pressure returns. The traded REIT simply reflects these realities (and market sentiment) immediately, while the non-traded REIT reflects them with a lag. So a publicly traded REIT's greater visible volatility doesn't necessarily mean it's a riskier underlying investment — it means its value is continuously marked to market. Judge risk by the underlying real estate and structure, not by how smoothly the reported value moves. Each has trade-offs to weigh.

Many investors hold REITs as a long-term portfolio component for income and real estate diversification, but the right approach depends on the structure and your goals. Publicly traded REITs can be held long-term while still offering liquidity if your needs change — they provide an income stream tied to real estate and historically behave somewhat differently from stocks and bonds, which can aid diversification. Non-traded REITs are specifically designed for the long term, since they're illiquid and meant to be held through a multi-year period; they're appropriate only for capital you can leave invested. Either way, REITs carry real risk — distributions can be cut, share prices and NAVs fluctuate, and sectors can underperform — so any REIT allocation should be sized to fit your overall plan and risk tolerance. So REITs can be a sound long-term holding within a diversified portfolio, with traded REITs offering flexibility and non-traded REITs requiring a genuine long-term commitment. Match the structure and size to your goals.

We help investors compare non-traded and publicly traded REITs — the liquidity and pricing differences, the fee structures, the volatility and NAV valuation, and which structure suits your goals — so you can choose the structure that fits your liquidity needs, time horizon, and risk tolerance. REIT and non-traded-REIT interests are offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), and any recommendation follows a suitability review; non-traded and private REITs typically require accredited or otherwise suitable investors, while publicly traded REITs trade through ordinary brokerage. We help you understand the trade-offs, evaluate non-traded REIT offerings (structure, fees, redemption terms, and underlying real estate), and, if suitable, access them. Baker 1031 doesn't provide tax or legal advice — your CPA handles your specific situation. We're candid that non-traded REITs are illiquid and have historically carried higher fees, and that traded REITs carry market volatility; neither yields nor returns are promised, and past performance doesn't guarantee future results.