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 like any other company. You open a brokerage account, search for the REIT by its ticker symbol, and place an order to buy shares at the market price. The whole process takes minutes once your account is funded. You own a fractional piece of real estate holdings without buying property yourself, paying a mortgage, or managing tenants.

The main difference from buying individual stocks is that REITs are required by law to distribute at least 90 percent of their taxable income to shareholders as dividends. That means you receive regular payouts — usually quarterly — but you also pay income tax on those dividends in the year you receive them, even if you reinvest them.

Key Takeaways

  • You need a brokerage account (through a bank, online broker, or investment app) and cash or securities to fund it before you can buy REIT shares.
  • REIT shares trade during market hours on exchanges like the NYSE or NASDAQ, so you can buy and sell them instantly at the current price.
  • REITs must pay out 90 percent of taxable income as dividends, which means higher dividend income but also higher annual tax liability.
  • You can hold REIT shares in a regular taxable account, a retirement account (401k, IRA), or both, and the tax treatment differs by account type.
  • REIT share prices fluctuate with market conditions and interest rates, so you can lose money if you sell when the price has dropped.

Opening a brokerage account

You need a brokerage account to buy any stock, including REITs. Most banks offer brokerage services, and dozens of online brokers (Fidelity, Charles Schwab, E-Trade, Robinhood, Webull, and others) let you open an account online in 10 to 15 minutes. You will provide your name, Social Security number, address, and employment information. The broker runs a background check and opens the account.

Once the account is open, you fund it by transferring money from your bank account. Some brokers offer commission-free trading on stocks and ETFs, though this varies. Check the broker's fee schedule before you open the account — some charge per trade, some charge annual account fees, and some charge nothing.

If you already have a retirement account (401k or IRA) at a brokerage, you can often buy REITs inside that account without opening a separate one. This is usually the tax-efficient choice because dividends inside a retirement account are not taxed until you withdraw the money.

Finding and buying REIT shares

Once your account is funded, search for the REIT by its ticker symbol (a four- or five-letter code like "SPG" for Simon Property Group or "O" for Realty Income). The broker's platform will show you the current price, the bid-ask spread (the difference between what buyers will pay and what sellers are asking), and recent trading volume. Place a market order to buy at the current price, or a limit order to buy only if the price drops to a specific level you set.

Market orders execute immediately during trading hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). Limit orders may take hours or days to fill, or may not fill at all if the price never reaches your target. After the order fills, the shares appear in your account and you own them. You can sell them anytime the market is open.

Many brokers also offer fractional shares, meaning you can buy a portion of one share if you do not have enough cash for a full share. This lowers the barrier to entry but does not change how dividends or taxes work.

Understanding REIT dividends and taxes

REITs must distribute at least 90 percent of their taxable income to shareholders. This means a REIT's dividend yield (annual dividend divided by share price) is often higher than the average stock dividend — sometimes 3 to 6 percent or more. You receive these dividends quarterly, usually deposited directly into your brokerage account.

The tax treatment depends on where you hold the shares. In a regular taxable account, you owe income tax on dividends in the year you receive them, at your ordinary income tax rate (not the lower capital gains rate). In a retirement account like a traditional IRA or 401k, you owe no tax on dividends until you withdraw money from the account. In a Roth IRA, may have access to withdrawals are tax-free.

You also owe capital gains tax if you sell the shares for more than you paid. If you hold the shares for more than one year, the gain is taxed as a long-term capital gain at a lower rate than ordinary income. If you sell within one year, it is taxed as a short-term capital gain at your ordinary income tax rate.

Choosing between individual REITs and REIT funds

You can buy shares in a single REIT, or you can buy a mutual fund or exchange-traded fund (ETF) that holds many REITs. A single REIT concentrates your real estate exposure in one company and one property type — for example, Welltower focuses on healthcare properties, while Prologis focuses on industrial warehouses. A REIT fund spreads your money across dozens of REITs and property types, reducing the risk that one company or sector performs poorly.

REIT funds have expense ratios (annual fees charged by the fund manager), typically 0.1 to 0.5 percent per year. Individual REIT shares have no ongoing fees beyond your broker's trading commissions. REIT funds are easier for beginners because they offer instant diversification, but individual REITs give you more control over which properties and companies you own.

Both individual REITs and REIT funds trade during market hours and can be bought and sold instantly. Both pay dividends and are taxed the same way. The choice depends on how much research you want to do and how much diversification you want.

What happens to your money after you buy

Once you own REIT shares, the REIT's management team buys, sells, and manages real estate on your behalf. You do not make those decisions. You receive quarterly dividend payments, and the share price moves up or down based on the REIT's performance, interest rates, and overall market conditions. If interest rates rise, REIT share prices often fall because investors can get higher returns from bonds. If the REIT's properties generate more income, the share price may rise.

You can hold the shares indefinitely, sell them anytime the market is open, or reinvest your dividends to buy more shares. Some brokers offer automatic dividend reinvestment (DRIP), which buys new shares with your dividend payments without charging a commission. This can amplify your returns over time but also increases your annual tax bill in a taxable account.

Common mistakes to avoid

Do not assume REIT dividends are a return of your money — they are taxable income, and you owe tax on them even if you reinvest them. Do not buy a REIT expecting the share price to stay stable; REIT prices move with interest rates and market sentiment, and you can lose money if you sell when the price has dropped. Do not ignore the REIT's debt level and interest coverage; a REIT that borrows heavily may cut its dividend if interest rates rise or property values fall.

Do not buy individual REITs without understanding what properties they own and which geographic markets they operate in. A REIT that owns office buildings in a declining city faces different risks than one that owns warehouses in growing logistics hubs. Read the REIT's annual report (10-K filing) or investor presentation before you buy, or choose a diversified REIT fund instead.

Frequently Asked Questions

How much money do I need to start buying REIT shares?

Most brokers have no minimum account balance. If a REIT share costs $50 and your broker offers fractional shares, you can start with $1. In practice, most people start with at least a few hundred dollars to make the investment worthwhile after trading fees and taxes. Check your broker's minimum deposit requirement — some have none, others require $500 or $1,000 to open an account.

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

Yes. Most brokers let you buy individual REIT shares or REIT funds inside a traditional IRA, Roth IRA, or 401k. This is often the best place to hold REITs because dividends are not taxed until you withdraw money (or never, in a Roth). Check with your employer or broker to confirm your retirement account allows self-directed stock purchases.

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

A REIT is a single company that owns and manages real estate. A REIT ETF is a fund that holds many REITs. An ETF offers instant diversification and lower risk if one REIT performs poorly, but you have less control over which properties you own. Both trade like stocks and pay dividends.

Do I have to hold REIT shares for a certain amount of time?

No. You can sell anytime the market is open. However, if you sell within one year of buying, any profit is taxed as short-term capital gain at your ordinary income tax rate, which is higher than the long-term rate. Holding for more than one year qualifies you for the lower long-term capital gains rate.

What happens if a REIT cuts its dividend?

The share price usually falls when a REIT cuts its dividend, because investors buy REITs partly for the income. A dividend cut signals that the REIT's properties are generating less income or the company is facing financial stress. You can sell the shares and move your money elsewhere, or hold and hope the dividend recovers.