You can buy shares of a publicly traded REIT the same way you buy any stock: through a brokerage account, using the company’s ticker symbol, for as little as the price of a single share. REITs (real estate investment trusts) own and operate income-producing properties like apartment buildings, office towers, warehouses, and hospitals, then pass most of the rental income to shareholders as dividends. Here’s how to get started, what to look for, and how the tax side works.
Choose How You Want to Invest
There are three main ways to buy into REITs, and each suits a different level of involvement.
Individual REIT stocks. Publicly traded REITs are listed on major exchanges like the NYSE and Nasdaq. You pick a specific company, research its properties and finances, and buy shares through your broker. This gives you full control over which property sectors you’re exposed to, whether that’s data centers, self-storage, cell towers, or retail. The tradeoff is concentration: your returns depend on one company’s management and portfolio.
REIT ETFs and mutual funds. A REIT exchange-traded fund holds dozens or even hundreds of REITs in a single ticker, giving you broad real estate exposure in one trade. The Vanguard REIT ETF (VNQ) is one of the largest, with roughly $65.7 billion in assets, tracking the MSCI US Investable Market Real Estate 25/50 Index. The iShares U.S. Real Estate ETF (IYR) is another popular option with about $3.99 billion in assets and an expense ratio of 0.38%. ETFs charge a small annual fee (the expense ratio) but spare you the work of researching individual companies.
Non-traded (public but unlisted) REITs. These are registered with the SEC but don’t trade on a stock exchange. You typically buy them through a financial advisor or a specialized platform, with minimum investments usually ranging from $1,000 to $2,500. Because they aren’t traded daily, they’re harder to sell quickly, and fees tend to be higher than exchange-listed REITs. Most new investors are better served by publicly traded options.
Open a Brokerage Account
If you don’t already have one, you’ll need a brokerage account. Most major online brokers let you open an account in minutes with your name, Social Security number, and a linked bank account. Many charge zero commissions on stock and ETF trades, so the cost of buying REIT shares is often nothing beyond the share price itself.
You can hold REITs in a standard taxable account, a traditional IRA, or a Roth IRA. The account type matters because of how REIT dividends are taxed, which we’ll cover below. Once your account is funded, search for the REIT’s ticker symbol, enter the number of shares you want, and place your order. If you’re buying an ETF, the process is identical.
How to Evaluate a REIT Before Buying
REITs don’t behave like typical growth stocks, so the standard earnings-per-share metric can be misleading. The key number to focus on is Funds From Operations, or FFO. This metric takes net income and adds back depreciation and amortization, while subtracting gains from property sales. The adjustment matters because accounting rules require REITs to depreciate their buildings over time, even though many properties actually appreciate in value. FFO strips out that distortion and gives you a clearer picture of how much cash the REIT is actually generating from its operations.
FFO per share works like earnings per share but is tailored to real estate. You can compare it across similar REITs to see which ones generate more income relative to their share price. A related metric, Adjusted Funds From Operations (AFFO), goes a step further by subtracting recurring capital expenditures like roof replacements and parking lot repaving. AFFO is often considered the closest proxy for a REIT’s sustainable dividend-paying ability.
Beyond FFO, look at the dividend yield (annual dividends divided by the share price), the occupancy rate of the REIT’s properties, and the debt-to-equity ratio. A REIT with high occupancy, moderate leverage, and a dividend well-covered by AFFO is generally on solid footing. You can pull annual and quarterly reports for any publicly traded REIT through the SEC’s EDGAR system to verify these numbers yourself.
What Property Sectors Are Available
REITs span nearly every corner of commercial real estate. The major categories include residential (apartment complexes), industrial (warehouses and distribution centers), office, retail (shopping centers and malls), healthcare (hospitals and senior living), data centers, cell towers, self-storage, and timberland. Each sector responds differently to economic cycles. Industrial and data center REITs, for instance, have benefited from e-commerce and cloud computing growth, while office REITs have faced headwinds from remote work trends.
If you buy a broad REIT ETF, you’ll get a mix of these sectors weighted by market size. If you buy individual REITs, you can tilt toward the sectors you find most compelling, but you take on more concentrated risk.
How REIT Dividends Are Taxed
REITs are required to distribute at least 90% of their taxable income to shareholders, which is why their dividend yields tend to be higher than the broader stock market. The flip side is the tax treatment. Most REIT dividends are classified as ordinary income, not qualified dividends, so they’re taxed at your regular income tax rate rather than the lower capital gains rate. For top earners, the federal rate on ordinary income is set to return to 39.6% in 2026, plus a 3.8% surtax on net investment income.
Through the end of 2025, a provision known as the qualified business income deduction allows taxpayers to generally deduct 20% of qualified REIT dividends, effectively lowering the tax bite. Whether that deduction gets extended beyond 2025 depends on legislation. If it expires, the full ordinary income rate applies to your REIT distributions starting in 2026.
This tax treatment is one reason many investors hold REITs inside a Roth IRA or traditional IRA, where dividends either grow tax-deferred or are withdrawn tax-free. In a taxable account, you’ll owe taxes on REIT dividends each year regardless of whether you reinvest them.
Decide Between Individual REITs and ETFs
If you’re comfortable reading financial statements and want to target a specific property type, individual REIT stocks let you do that with no ongoing fund fees. You’ll need to track each company’s FFO, debt levels, and property portfolio over time.
If you’d rather set it and forget it, a REIT ETF handles diversification automatically. You get exposure to dozens of companies across multiple property sectors in a single purchase, and you can reinvest dividends without picking individual names. Expense ratios on major REIT ETFs are low, typically under 0.40% per year, meaning a $10,000 investment costs you less than $40 annually in fund fees.
Many investors split the difference: they hold a core REIT ETF for broad exposure and add a few individual REITs in sectors they have high conviction about. There’s no minimum allocation rule. Even a small REIT position adds real estate diversification to a portfolio otherwise dominated by traditional stocks and bonds.