Small investors flocked to commercial real estate with non-traded real estate investment trusts | National News

Real estate investment trusts are attractive to investors because they allow investors to buy shares of a trust that invests in commercial real estate projects rather than buying and managing their own properties. This can make commercial real estate less risky and more affordable for investors, but you have to be an accredited investor to invest in most traditional publicly traded REITs—which comes with numerous financial requirements, like a high net worth and high earned income.

As such, it can be tough for small investors to qualify, which has led them to set their sights on other options such as real estate crowdfunding, which opens access to commercial real estate transitions and other private fund structures. Another option includes open-ended funds, known as non-traded real estate investment trusts. Non-traded REITs accounted for about 42% of the alternative investment market in 2021, with about $36.5 billion total in fundraising that year alone. Part of the draw is that, unlike most traditional REITs, investors can buy into non-traded REITs for as little as $2,500—and there’s an opportunity for big returns in exchange. Most non-traded REITs have been paying dividends above 5%, which is competitive—and often beats—other types of fixed-income investments.