For the most part, yes. Although non-traded REITs’ practices and procedures vary, most REITs have the ability to use new investor’s money to pay distributions to current investors. This practice has been used by multiple REITs in the past and continues to be used by some REITs to this day. Since this practice has to be disclosed in the REIT’s quarterly reports and in the annual report filed with the SEC, investors should ask their advisor whether the REIT uses (or has used in the past) new investor’s money to pay distributions. See the author’s video commentary on this issue by clicking here.