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

A REIT (Real Estate Investment Trust) is a company that owns and operates income-producing real estate — apartment buildings, shopping centers, warehouses, data centers, or office parks. When you buy shares of a REIT, you own a piece of that company and receive a portion of the income it generates from rent and property sales. You do not own the buildings themselves; you own shares in the entity that does.

To invest in REITs, you need a brokerage account — the same kind you would use to buy individual stocks. You can open one with firms like Fidelity, Charles Schwab, E-Trade, or dozens of others. Once your account is funded, you search for the REIT by its ticker symbol and place a buy order just as you would for any stock. The transaction settles in two business days, and the shares appear in your account.

REITs trade on major stock exchanges during regular market hours. This means you can buy and sell them quickly, unlike owning physical property, which takes months to transact. You also do not need a down payment, a mortgage, or a property inspection — you simply buy the number of shares you can afford.

Key Takeaways

  • You purchase REIT shares through any brokerage account using the same process as buying stocks, with no minimum investment beyond what your broker requires.
  • REITs are required by law to distribute at least 90 percent of their taxable income to shareholders as dividends, making them income-focused investments.
  • REIT prices fluctuate with the stock market and interest rates, so your shares can lose value even if the underlying properties are performing well.
  • You can hold REITs in tax-advantaged accounts like IRAs and 401(k)s, though dividend income is taxed as ordinary income rather than capital gains.
  • Diversification across property types and geographic regions reduces risk, and many investors use REIT mutual funds or ETFs instead of picking individual REITs.

Opening a brokerage account and funding it

Choose a brokerage firm and open an account online. Most brokers have no account minimum, though some charge monthly fees if your balance falls below a certain level. You will need to provide your Social Security number, proof of address, and banking information. The process typically takes 10 to 15 minutes.

Once your account is open, transfer money from your bank. Most brokers offer free transfers via ACH (Automated Clearing House), which takes three to five business days. Some allow you to link your bank account and transfer instantly, though they may hold the funds for a settlement period before you can trade. Start with whatever amount you are comfortable investing — there is no minimum to buy a single REIT share, though some brokers charge a commission per trade if you are not using their commission-free platform.

If you already have a 401(k) or IRA, check whether your plan administrator or custodian allows self-directed investing in individual REITs. Many do, though some restrict you to mutual funds or ETFs. If your plan does not allow it, you can always open a separate taxable brokerage account.

Finding and researching individual REITs

REITs are organized by property type: residential (apartments), retail (shopping centers), industrial (warehouses), office, healthcare (medical buildings and senior housing), hospitality (hotels), or diversified (multiple types). Start by deciding what sector interests you or what you want to avoid. A healthcare REIT behaves differently from an industrial one because their tenants, lease terms, and economic drivers are different.

Search for REITs by sector on your brokerage platform or on financial websites like Yahoo Finance, Morningstar, or the National Association of Real Estate Investment Trusts (NAREIT) website. Look at the REIT's dividend yield (the annual dividend divided by the share price), the dividend history (whether it has been stable or cut), and the payout ratio (what percentage of earnings goes to dividends). A yield that is much higher than others in the same sector may signal financial stress.

Read the REIT's annual report (10-K filing) or quarterly earnings reports (10-Q filings), which are free on the SEC's EDGAR database. Pay attention to occupancy rates (what percentage of properties are rented), same-store net operating income (whether existing properties are generating more or less revenue year over year), and debt levels. A REIT with high debt and falling occupancy is riskier than one with moderate debt and stable tenants.

Understanding dividends and how they are taxed

REITs must distribute at least 90 percent of their taxable income to shareholders as dividends. This is why REIT shares often pay higher yields than stocks — you are receiving most of the company's earnings as cash. Dividends are usually paid quarterly, and the amount can fluctuate based on the REIT's performance and management decisions.

REIT dividends are taxed as ordinary income, not as capital gains, even if you hold the shares for years. This means they are taxed at your regular income tax rate, which is typically higher than the long-term capital gains rate. If you hold REITs in a taxable account, you will owe taxes on the dividends every year, regardless of whether you reinvest them or spend them. This makes REITs particularly tax-efficient in retirement accounts like traditional IRAs or 401(k)s, where dividends compound without annual tax liability.

Some REIT dividends include a return of capital, which is not immediately taxable but reduces your cost basis in the shares. Your brokerage will report this on your tax forms, and your accountant or tax software will handle the adjustment. Keep records of all dividend payments and cost basis adjustments for accurate tax reporting.

Choosing between individual REITs, mutual funds, and ETFs

Buying individual REIT shares gives you control over exactly what you own and lets you concentrate your investment in sectors or companies you believe in. The downside is that you carry all the risk of that single company — if management makes poor decisions or the property market in that region weakens, your investment suffers.

REIT mutual funds and exchange-traded funds (ETFs) pool money from many investors and hold dozens or hundreds of REITs across different sectors and geographies. This diversification reduces the impact of any single REIT's poor performance. Mutual funds are actively managed by a fund manager who picks holdings; ETFs are usually passively managed and track an index. Both charge annual fees (called expense ratios), typically ranging from 0.1 to 1 percent per year. ETFs trade like stocks during market hours; mutual funds trade once per day after the market closes.

For most investors new to REITs, a diversified REIT ETF or mutual fund is simpler and safer than picking individual REITs. You get broad exposure to real estate without needing to research individual companies. If you want to build your own REIT portfolio, start with a core holding in a diversified fund and add individual REITs in sectors where you have conviction.

Managing risk and timing your purchases

REIT prices move with the stock market and with interest rates. When the Federal Reserve raises interest rates, REIT valuations often fall because investors can earn higher returns from bonds and savings accounts, making real estate less attractive. Conversely, when rates fall, REITs often rise. This means your REIT shares can lose 20 or 30 percent of their value in a year even if the underlying properties are performing well.

Do not try to time the market by waiting for the perfect price. Instead, invest consistently over time — a practice called dollar-cost averaging. Buy a fixed amount every month or quarter, regardless of price. This way, you buy more shares when prices are low and fewer when they are high, smoothing out your average cost.

Diversify across property types and geographies. Do not put all your money into one sector like office REITs, which have struggled since remote work became common. A mix of residential, industrial, healthcare, and retail REITs spreads your risk. If you are using a REIT ETF, this diversification is built in.

Tax-advantaged accounts and long-term planning

REITs held in a traditional IRA or 401(k) avoid annual dividend taxation, which is a major advantage given that REIT dividends are taxed as ordinary income. If you have access to a 401(k) through your employer, check whether it offers a self-directed brokerage window that lets you buy individual REITs. If not, you can open a traditional or Roth IRA and invest in REITs there.

In a Roth IRA, dividends and capital gains grow tax-free, and you can withdraw them tax-free in retirement. This makes a Roth IRA an excellent home for REITs if you are young enough to benefit from decades of tax-free growth. In a traditional IRA, you defer taxes until withdrawal, at which point all withdrawals are taxed as ordinary income.

If you have maxed out your retirement account contributions and want to invest more in REITs, use a taxable brokerage account. You will owe taxes on dividends each year, but you can also harvest losses to offset other gains. Hold REITs for at least one year before selling to may have access to for long-term capital gains treatment on any appreciation, though dividends remain taxed as ordinary income regardless of holding period.

Frequently Asked Questions

What is the minimum amount I need to invest in a REIT?

There is no legal minimum. You can buy a single share of any REIT through a brokerage account. Some brokers charge a commission per trade, which may make very small purchases uneconomical, but most modern brokers offer commission-free stock trading. Start with whatever amount you can afford.

Do I need to be an accredited investor to buy REITs?

No. Publicly traded REITs are open to any investor. Accreditation requirements apply only to private REITs, which are not traded on public exchanges and typically require a minimum investment of $25,000 or more. Public REITs are the standard choice for individual investors.

Can I lose money investing in REITs?

Yes. REIT share prices fluctuate with the stock market and interest rates. You can buy at $50 per share and see it fall to $35. If you sell at that price, you lock in a loss. However, if you hold long-term and reinvest dividends, historical data shows real estate has appreciated over decades.

Should I reinvest REIT dividends or take them as cash?

Reinvesting dividends compounds your returns over time and is usually the better choice for long-term investors. Most brokers offer automatic dividend reinvestment (DRIP) at no cost. If you need the income now, take the cash. Either way, you owe taxes on the dividend in the year it is paid.

What happens to my REIT shares if the company is acquired?

If another company buys the REIT, your shares are typically converted to cash or shares in the acquiring company at a price negotiated in the deal. You may owe capital gains taxes on any profit. The acquiring company will notify you of the details and timeline.