Does the door you come in through change what a non-traded REIT offers you

Question

Registered non-traded REITs with a modest minimum, say around 2,500 dollars, are often the first entry point into this category for investors used to lower price points. There are generally two doors in, and they can lead to different shelves. One door is a financial advisor. They walk an investor through the offering, carry a duty to consider suitability, and have typically seen sponsors behave badly before. They also get paid, sometimes out of the offering itself, so the shelf they present is shaped by their firm's agreements. The other door is a crowdfunding or online platform. Lower friction, more information on screen, and the investor reads the documents directly. The platform also gets paid and also curates its own shelf, without anyone standing between the investor and a bad decision. What's worth checking before committing capital is whether the same vehicles show up on both doors, or whether the advisor channel offers share classes with different fee structures than the platform channel. If the same fund has multiple share classes with different loads depending on how it was accessed, the door matters as much as the fund itself. For a first position that's intentionally small, either door can work, but it's worth deciding in advance whether the same door will be used for a larger check later, since the fee structure encountered the first time may not be the best one available.

sonia_alvarez · Answer

Share classes are real and they are the first thing to check. The same fund can offer several classes with different upfront selling commissions and ongoing stockholder servicing fees, and different eligibility rules, and the class you can access often depends on the channel you came through. The prospectus has a table comparing them. Read that table before you read anything about the properties. On your actual question, Hollow, the doors are not the same shelf. Advisor channels tend toward sponsors with distribution agreements in place, which skews larger and longer-established. Platforms carry sponsors who wanted a direct channel, which includes some good smaller managers and some who could not get distribution. Neither pattern tells you about any specific offering. The part that deserves the most weight is what you get from the second opinion. An advisor's value here is having watched sponsors handle a bad quarter. If you get someone who has only ever sold the vehicle in good years, you are paying for distribution rather than judgment. Ask them directly which non-traded programs they have seen suspend or prorate repurchases and what happened to the clients in them. The answer sorts people fast. Whether an advisor relationship makes sense for your situation is a licensing and suitability question, so that part goes to a professional.

kevin_lombard · Answer

Tender, that share class table is the thing I missed entirely the first time I read one of these. I went straight to the property photos.

Hollow, I'd do the platform for a small first position for a reason that isn't about cost. Reading the documents yourself while the amount is small is how you learn to read them. If an advisor reads them for you on the small check, you're in the same spot on the big one.

Does the door you come in through change what a non-traded REIT offers you

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