You can buy REIT shares the same way you buy stock — through a brokerage account

A REIT (Real Estate Investment Trust) trades on a stock exchange just like any other public company. You open a brokerage account, search for the REIT by its ticker symbol, and place a buy order. The transaction settles in two business days, and you own the shares. There is no special process, no real estate license required, and no minimum investment beyond what your broker sets (usually $1 to $10 per share, depending on the REIT).

The main decision is which brokerage to use and which REIT to buy. Both matter, but for different reasons. Your broker determines how much you pay in fees and how easy the platform is to navigate. The REIT you choose determines what real estate you own a piece of — office buildings, apartments, shopping centers, data centers, or something else — and how much income it pays you.

Key Takeaways

  • You need a brokerage account (online brokers like Fidelity, Charles Schwab, and E-Trade all offer them) and enough money to buy at least one share.
  • Search for the REIT by its ticker symbol, place a buy order at market price or set a limit price, and the shares settle in two business days.
  • Most brokers charge no commission on stock trades, but some charge fees for certain account types or trading patterns.
  • REITs pay dividends (usually quarterly), and those dividends are taxed as ordinary income, not capital gains, which affects your tax bill.
  • You can buy individual REIT shares or invest in a mutual fund or exchange-traded fund (ETF) that holds multiple REITs.

Opening a brokerage account

You will need a brokerage account to buy REIT shares. Most online brokers take 10 to 15 minutes to open an account and require a Social Security number, proof of address, and a bank account or credit card to fund it. Popular brokers include Fidelity, Charles Schwab, E-Trade, Interactive Brokers, and Webull. Each has different fee structures, research tools, and minimum account balances (many have no minimum).

When you open an account, you will choose between a regular taxable account and a retirement account (like an IRA). A taxable account has no contribution limits and no withdrawal restrictions — you can buy and sell whenever you want. A retirement account (traditional or Roth IRA) has annual contribution limits (currently $7,000 for most people under 50) but offers tax advantages. REIT dividends in a retirement account are not taxed until you withdraw the money, which can save you money over time.

Fund your account by linking a bank account or transferring money from another brokerage. Most transfers take one to three business days. Once the money is in your account, you are ready to search for and buy REIT shares.

Finding and buying a specific REIT

Every publicly traded REIT has a ticker symbol — a one- to five-letter code that identifies it on the stock exchange. For example, Realty Income trades under the symbol O, and Welltower trades under WELL. You can find a REIT's ticker by searching its name on your broker's website or on financial sites like Yahoo Finance or Google Finance.

Once you have the ticker, log into your brokerage account and search for it in the "buy" or "trade" section. The broker will show you the current price per share, the number of shares available, and recent trading volume. You then decide how many shares to buy. If a REIT costs $50 per share and you have $1,000 to invest, you can buy 20 shares.

You have two ways to place an order. A market order buys shares at the current price immediately — useful if you want to buy now and do not care about a small price difference. A limit order lets you set a maximum price you are willing to pay; the broker buys only if the price drops to that level or lower. Limit orders take longer to fill (sometimes they never fill) but protect you from overpaying. Most people use market orders for REITs because the price does not swing wildly during the day.

Understanding costs and fees

Most online brokers charge zero commission on stock trades, including REIT shares. That was not always true — 10 years ago, brokers charged $5 to $10 per trade — but competition has eliminated those fees for most retail investors.

However, some costs still exist. If you trade very frequently (more than a few times per month), some brokers flag your account as a pattern day trader and impose restrictions or higher fees. If you hold shares in a retirement account and want to take out a loan against them, your broker may charge interest. If you use a financial advisor instead of a self-directed account, you will pay an advisory fee (usually 0.5% to 1% of your account balance per year).

The real cost of owning a REIT is the expense ratio — the annual fee the REIT itself charges to cover management and operations. This is deducted from the REIT's earnings before dividends are paid to you. Most REITs charge between 0.5% and 1.5% per year. If you buy a REIT mutual fund or ETF instead of individual shares, that fund also has an expense ratio (usually 0.1% to 0.8% per year), which stacks on top of the REIT's own costs.

Dividends and how they are taxed

REITs are required by law to pay out at least 90% of their taxable income as dividends to shareholders. Most pay quarterly (four times per year). The dividend amount varies by REIT and changes over time based on the REIT's earnings and decisions about how much to retain.

When you receive a REIT dividend, it is taxed as ordinary income, not as a capital gain. This means it is taxed at your regular income tax rate (up to 37% federally, depending on your bracket) rather than the lower capital gains rate (up to 20%). This is one reason many investors hold REITs in retirement accounts — the dividends are not taxed until you withdraw money, which may be decades later.

Your broker will send you a 1099-DIV form each January showing how much in dividends you received during the previous year. You report this on your tax return. If you sold REIT shares at a profit, you also report the capital gain separately (taxed at capital gains rates, not ordinary income rates).

Buying REIT funds instead of individual shares

Instead of picking one REIT, you can buy a mutual fund or exchange-traded fund (ETF) that holds dozens or hundreds of REITs. This spreads your risk across many properties and REIT managers. A REIT index fund, for example, might hold 100+ REITs and track the overall REIT market.

The process is identical to buying individual REIT shares: search for the fund's ticker in your brokerage account and place an order. The price per share is usually lower (often $20 to $100), so you can own a diversified REIT portfolio with a smaller initial investment. The downside is that you pay the fund's expense ratio on top of the underlying REITs' expense ratios, though index funds keep this low (often 0.1% to 0.3%).

Popular REIT index funds include Vanguard Real Estate ETF (VNQ), iShares U.S. Real Estate ETF (IYR), and Schwab U.S. REIT ETF (SCHH). Each holds a different mix of REITs and charges different fees, so compare them before buying.

What happens after you buy

Once your shares settle (two business days after you buy), you own them. You will see them in your account balance, and you can check their current price any time the market is open (9:30 a.m. to 4 p.m. Eastern time, Monday through Friday). Dividends are deposited into your account automatically, usually within a few days of the payment date.

You can hold the shares indefinitely, sell them whenever you want (during market hours), or reinvest the dividends by buying more shares. Many brokers offer a dividend reinvestment plan (DRIP) that automatically buys new shares with your dividend payments, compounding your investment over time. This is useful for long-term investors but means you will owe taxes on dividends even though you did not receive cash.

Your shares will fluctuate in price daily based on market demand and the REIT's performance. This is normal. If you are holding for income (the dividends), short-term price swings do not matter much. If you are holding for price appreciation, you will want to monitor the REIT's quarterly earnings reports and property performance.

Frequently Asked Questions

Do I need a lot of money to start buying REITs?

No. Most REITs trade for $20 to $100 per share, so you can buy one or two shares with $50 to $200. If you want to start smaller, buy a REIT ETF, which may cost $30 to $80 per share and gives you exposure to dozens of REITs at once.

Can I buy REITs in a retirement account like an IRA?

Yes. You can hold REIT shares or REIT funds in a traditional IRA, Roth IRA, or 401(k). This is often better than holding them in a taxable account because REIT dividends are taxed as ordinary income, and retirement accounts defer or eliminate that tax.

What is the difference between a REIT ETF and a REIT mutual fund?

Both hold multiple REITs, but ETFs trade like stocks (you buy and sell during market hours at a changing price) while mutual funds trade once per day after the market closes. ETFs usually have lower expense ratios and are more tax-efficient. For most investors, an ETF is the simpler choice.

How often do REITs pay dividends?

Most REITs pay dividends quarterly (four times per year), though some pay monthly or semi-annually. The payment schedule is listed on the REIT's website and in your broker's research tools. You will receive the dividend automatically if you own the shares on the ex-dividend date.

Can I lose money buying a REIT?

Yes. REIT share prices rise and fall based on market conditions, interest rates, and the REIT's performance. If you sell when the price is lower than what you paid, you realize a loss. However, if you hold for the dividends and do not sell, a temporary price drop does not affect your income.