Real estate investment trusts (REITs) are a special form of tax-advantaged business entity created for the purpose of encouraging widespread ownership of real estate by small investors. REITs provide the average investor with an opportunity to pool capital with others for investment in managed real estate, to spread risks through diversified holdings, and to acquire properties that might otherwise be beyond the means of the individual investor. REITs may be a publicly traded company or a private partnership that raises capital through private offerings.
Recently, real estate investments trusts (REITs) have been heavily promoted by investment advisors and stockbrokers. They are often marketed as safe, income-producing investment options. But many REITs have been very poor investments. Although many REITs prove to be unprofitable, unstable, and overvalued, brokers continue to push these investments because of the high percentage commissions. With billions of dollars in annual sales, thousands of investors have lost significant amounts, including many senior citizens and individuals close to retirement. In many cases, investment advisors and brokers wanted to make a lot of money quickly, and put their commission considerations ahead of their clients’ best interests.
Please call Rose Law if you believe your broker or financial advisor:
- Failed to properly investigate the risks of a REIT that you invested in, or failed to inform you about those risks
- Lied or made misrepresentations about a REIT you invested in
- Recommended a REIT that did not meet your investment risk profile. For example, if you told your broker you were a conservative, risk-averse investor, why did he put you in a risky investment?
- Failed to disclose a conflict of interest, such as the large commissions earned from selling REITs