You can buy REITs through a brokerage account the same way you buy stocks

A Real Estate Investment Trust (REIT) is a company that owns or finances real estate, and you buy shares of it through a regular investment account. You do not need special permission, a real estate license, or a minimum amount of money — just a brokerage account with a firm like Fidelity, Charles Schwab, E*TRADE, or your bank's investment arm. Once your account is open and funded, you search for the REIT by its ticker symbol, enter the number of shares you want, and complete the trade the same way you would buy any stock.

The main difference between REITs and stocks is what you own: instead of a piece of a company that makes or sells things, you own a piece of a company whose business is holding real property — apartment buildings, office parks, warehouses, shopping centers, or mortgages on those properties. Because of that structure, REITs are required by law to pay out at least 90 percent of their taxable income to shareholders as dividends, which is why many people buy them for income rather than growth.

Key Takeaways

  • You need a brokerage account with a firm like Fidelity, Charles Schwab, or your bank to buy REIT shares, and you can open one online in minutes.
  • REITs trade on stock exchanges under ticker symbols, so you buy them the same way you buy any stock — no real estate license or special paperwork required.
  • Most REITs pay dividends quarterly, and you are required to report those dividends as income on your tax return.
  • REIT prices move with the stock market and interest rates, so the value of your shares can go up or down regardless of the underlying property value.
  • You can hold REITs in a retirement account like an IRA or 401(k) to defer taxes on dividends, though some accounts charge extra fees for REIT trades.

Opening a brokerage account

Before you can buy a REIT, you need a brokerage account — a holding place where your cash and investments sit. Most major brokerages have no account minimum, no monthly fee, and no requirement to keep a certain balance. You can open one online by providing your name, address, Social Security number, employment information, and banking details for deposits and withdrawals. The process usually takes 10 to 15 minutes, and your account is ready to trade within one business day.

Choose a brokerage based on what matters to you: some charge no commission on stock trades but have higher margin interest rates; others offer research tools or educational content; some have physical branches if you prefer to talk to someone in person. If you already have a checking or savings account at a bank, that bank often has an investment division and may waive fees for account holders. There is no single "best" choice — the best one is the one you will actually use and understand.

Funding your account and finding REITs to buy

Once your account is open, you transfer money into it from your bank account. This usually takes one to three business days. While you wait, you can start researching REITs. Every REIT that trades publicly has a four-letter ticker symbol — for example, SPG (Simon Property Group, which owns shopping malls) or PLD (Prologis, which owns warehouses). You can search for REITs by property type, by ticker, or by name on your brokerage's website or on financial sites like Yahoo Finance or Google Finance.

When you find a REIT you are interested in, look at its fact sheet or prospectus to understand what it owns, how long it has been paying dividends, and what its dividend yield is (the annual dividend divided by the share price). A higher yield sounds attractive, but it can also mean the market thinks the REIT is riskier or that the dividend may not last. Read the most recent quarterly report or earnings call summary to understand whether the REIT is making money and whether management expects to keep paying the dividend.

Placing your first trade

Once your cash is in your account and you have decided which REIT to buy, log into your brokerage and search for the ticker symbol. The system will show you the current price per share and let you enter the number of shares you want to buy. You can place a market order (buy at whatever the price is right now) or a limit order (buy only if the price drops to a certain level). Most people use market orders for REITs because they trade frequently and the price does not usually swing much in a single day.

After you confirm the order, the trade executes almost instantly during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). Your brokerage will deduct the cost from your cash balance and add the shares to your account. You will receive a confirmation email with the trade details. From that point on, you own those shares and are may have access to to any dividends the REIT pays — usually quarterly, though some pay monthly.

Understanding REIT dividends and taxes

Most REITs pay dividends four times a year, and the amount per share is usually announced in advance. When the payment date arrives, the dividend is deposited into your brokerage account as cash. You can reinvest it by buying more shares, or you can leave it as cash and spend it or move it to your bank. Either way, you owe income tax on the full amount of the dividend in the year you receive it — even if you reinvest it and do not touch the money.

REIT dividends are taxed as ordinary income, not as capital gains, which means they are taxed at your regular income tax rate rather than the lower rate that applies to stock dividends. This is one reason many people hold REITs in tax-advantaged retirement accounts like traditional IRAs or 401(k)s, where dividends can grow without triggering an immediate tax bill. If you hold REITs in a regular taxable account, your brokerage will send you a Form 1099-DIV each January showing the total dividends you received, and you report that on your tax return.

Selling your REIT shares

You can sell your REIT shares anytime the market is open by logging into your brokerage, finding the REIT in your portfolio, and entering a sell order. The process is identical to buying, except you are reducing your share count instead of increasing it. The cash from the sale lands in your account within one business day and is available to withdraw or reinvest immediately.

When you sell, you may owe capital gains tax on any profit — the difference between what you paid for the shares and what you sold them for. If you held the shares for more than one year, the gain is taxed as a long-term capital gain (usually at a lower rate). If you held them for one year or less, it is taxed as a short-term capital gain (at your ordinary income tax rate). Your brokerage will track your cost basis (what you paid) and help you calculate the gain, but you are responsible for reporting it on your tax return.

Holding REITs in retirement accounts

Many people buy REITs inside a traditional IRA, Roth IRA, or 401(k) to avoid paying tax on the dividends every year. Inside these accounts, dividends can compound without triggering a tax bill until you withdraw the money (or never, in the case of a Roth). The process is the same as buying in a regular account — you log into your retirement account at your brokerage or plan administrator and search for the REIT by ticker.

One caveat: some 401(k) plans and IRAs charge a transaction fee for buying or selling individual stocks or REITs, while others do not. Check your plan documents or call your plan administrator before you trade. If fees are high, you may be better off buying a REIT mutual fund or exchange-traded fund (ETF) instead, which bundles many REITs together and usually has no per-trade fee. Your brokerage can show you which REIT funds are available in your plan.

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 a single share for that amount. Some brokerages now offer fractional shares, meaning you can buy a portion of a share for even less. There is no minimum account balance required at most brokerages, so you can start with whatever you can afford.

Can I lose money on a REIT?

Yes. REIT share prices move up and down based on market conditions and interest rates, not just the value of the underlying property. If you sell when the price is lower than what you paid, you lose money. However, if you hold the REIT and collect dividends, those dividends can offset losses over time. REITs are generally less volatile than individual stocks but more volatile than bonds.

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

A REIT is a single company; a REIT mutual fund or ETF holds shares in many REITs. Funds spread your risk across different property types and managers, but they charge an annual fee (usually 0.5 to 1 percent of your investment). Individual REITs have no annual fee but concentrate your money in one company. Many people own both.

Can I buy REITs through my 401(k)?

Most 401(k)s offer REIT options, either as individual REITs or as REIT mutual funds. Check your plan's investment menu or call your plan administrator. Some plans charge per-trade fees for individual stocks or REITs, so a REIT fund may be cheaper. If your plan does not offer REITs, you can always buy them in an IRA or a regular taxable brokerage account.

When do REIT dividends get paid?

Most REITs pay dividends quarterly — in January, April, July, and October, though the exact dates vary by REIT. Some pay monthly. Your brokerage will show you the dividend payment schedule when you look up the REIT. The dividend is automatically deposited into your account on the payment date.