You buy a REIT the same way you buy a stock: through a brokerage account, using cash or margin, and holding it in a regular or retirement account

A REIT (Real Estate Investment Trust) trades on an exchange like any other security. You do not need special permission, a real estate license, or a minimum investment amount beyond what your broker requires. The process takes minutes if you already have a brokerage account, or a few days if you need to open one first.

The main decision is not how to buy, but where to buy it — which brokerage, which account type (taxable or retirement), and whether you want a single REIT or a fund that holds many. Each choice affects your costs, taxes, and how much work you do to manage the holding.

Key Takeaways

  • You need a brokerage account with a bank, investment firm, or online broker before you can buy any REIT, whether it trades on a major exchange or not.
  • Most REITs trade on the NYSE or NASDAQ and cost the same commission as any stock — often zero at major brokers — but some trade over-the-counter and may have higher spreads or minimum purchases.
  • Buying a REIT in a retirement account like a traditional IRA or 401(k) defers taxes on dividends and gains, while buying in a taxable account means you pay tax on dividends each year.
  • A REIT mutual fund or exchange-traded fund (ETF) spreads your money across many properties and managers, reducing the risk that one REIT performs poorly.
  • You can set up automatic dividend reinvestment (DRIP) through most brokers so that distributions buy more shares without you taking action.

Opening a brokerage account if you do not have one

You need a brokerage account to hold any investment. If you already have one through your employer's 401(k) plan, a bank, or an online broker, you can skip this step. If not, you will choose between a bank brokerage (often higher fees but familiar), a traditional investment firm like Fidelity or Schwab (mid-range fees, broad options), or an online-only broker like Webull or E*TRADE (often lowest fees, minimal support).

The process takes 10 to 20 minutes online. You will provide your name, address, Social Security number, employment status, and funding method. Most brokers verify your identity when ready. Once approved, you can fund the account by linking a bank account (takes 1 to 3 business days) or mailing a check (takes 5 to 10 business days).

Ask your broker whether they charge a commission per trade. Most major online brokers charge zero commission on stocks and ETFs. Some charge a small fee for mutual funds. If you plan to buy a single REIT once and hold it, commission matters less. If you plan to buy and sell frequently, zero-commission brokers save money.

Choosing between a taxable account and a retirement account

A taxable brokerage account lets you buy and sell whenever you want with no restrictions. You pay income tax on REIT dividends each year, even if you do not sell the shares. You also pay capital gains tax when you sell at a profit. This account makes sense if you might need the money within a few years or want to move money in and out without penalty.

A retirement account — traditional IRA, Roth IRA, SEP-IRA, or 401(k) — lets you hold REITs tax-deferred or tax-free, depending on the account type. In a traditional IRA or 401(k), you do not pay tax on dividends or gains until you withdraw money in retirement. In a Roth IRA, you do not pay tax at all if you follow the withdrawal rules. The trade-off is that you cannot touch the money before age 59½ without a penalty (with rare exceptions), and you must take minimum withdrawals starting at age 73 from traditional accounts.

REITs are especially tax-inefficient in taxable accounts because they distribute most of their income as dividends, which are taxed as ordinary income, not the lower capital gains rate. Holding a REIT in a retirement account can save thousands in taxes over decades. If you have both account types available, a retirement account is usually the better place for a REIT.

Buying a single REIT versus a REIT fund

A single REIT is one company that owns and manages real estate. You search for it by name or ticker symbol in your broker's search bar, see the current price, and place an order. Examples include Realty Income (O), which owns commercial properties, or Welltower (WELL), which owns medical office buildings and senior housing. You own one business and its performance depends on that one manager and that one property type.

A REIT mutual fund or ETF holds shares of many REITs in one package. Vanguard Real Estate ETF (VNQ) holds over 150 REITs. Schwab U.S. REIT ETF (SCHH) holds about 130. When you buy one share of the fund, you own a tiny piece of all of them. The fund manager rebalances the holdings, so you do not have to pick individual REITs or monitor them. The trade-off is a small annual fee (usually 0.1% to 0.5% per year) and less control over which properties you own.

A fund reduces concentration risk — the danger that one REIT's bad quarter or management mistake tanks your investment. A single REIT can outperform a fund if you pick well, but it can also underperform. Most people starting out find a fund simpler and safer.

Placing your first order

Once your account is funded, search for the REIT or fund by name or ticker symbol in your broker's platform. Click the security to see its price, dividend history, and holdings. Then click "Buy" or "Place Order."

You will choose an order type. A market order buys when ready at the current price — useful if you are buying a widely traded REIT or fund and do not care about a few cents difference. A limit order lets you set a maximum price you will pay and waits until the price drops to that level or below — useful if you are buying a less-traded REIT and want to avoid overpaying, but it may never fill if the price never reaches your limit.

Enter the number of shares you want to buy. Your broker will show you the total cost including any commission. Review it, confirm, and the order executes. For a market order on a liquid REIT or fund, this happens in seconds. For a limit order, it may take hours or days.

Understanding costs and fees

When you buy a REIT, you pay the share price plus any commission your broker charges. Most major brokers charge zero commission on stocks and ETFs, so your only cost is the price itself. Some brokers charge a small fee for mutual funds (typically $5 to $50 per transaction).

Once you own the REIT, you pay an ongoing annual fee if it is a fund. A REIT ETF typically costs 0.1% to 0.5% per year of your investment. A REIT mutual fund typically costs 0.5% to 1.5% per year. A single REIT has no ongoing fee beyond the normal bid-ask spread (the tiny difference between the buy and sell price) when you trade it.

You also receive dividends, which most REITs distribute quarterly. These are paid directly to your account and can be reinvested automatically or taken as cash. Reinvestment buys more shares at no commission at most brokers, which compounds your growth over time.

Setting up automatic dividend reinvestment

Most brokers offer DRIP (Dividend Reinvestment Plan) at no cost. When your REIT or fund pays a dividend, the cash automatically buys more shares instead of sitting in your account. Over decades, this compounds significantly because you earn returns on the reinvested dividends, not just on your original investment.

To set up DRIP, log into your broker's platform, find the security you own, and look for a "Reinvest Dividends" or "DRIP" option. Click it and confirm. From then on, every dividend payment buys fractional shares (most brokers now allow this) at no commission. You can turn DRIP off anytime if you want to receive dividends as cash instead.

DRIP is especially powerful in retirement accounts, where you do not pay tax on the reinvested dividends until you withdraw. In taxable accounts, you still owe tax on the dividends even though you did not receive the cash, so DRIP does not reduce your tax bill — it just reinvests the money automatically.

Frequently Asked Questions

Can I buy a REIT through my employer's 401(k)?

Yes, if your plan offers a brokerage window or self-directed option. Most 401(k) plans limit you to a menu of mutual funds and target-date funds chosen by your employer. Some plans let you open a brokerage window within the 401(k) to buy individual stocks, ETFs, and REITs. Ask your plan administrator whether this option is available. If it is, you can buy any publicly traded REIT using the same process as a regular brokerage account.

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

Most brokers require a minimum account balance of $0 to $500 to open an account, but you can buy a single share of any REIT or REIT ETF for the current share price. A REIT trading at $50 per share costs $50 to buy one share. A REIT ETF trading at $100 costs $100. There is no hidden minimum beyond the share price itself.

Do I need to report REIT purchases to the IRS?

Your broker reports all dividend income and capital gains to the IRS automatically. You do not need to do anything special when you buy a REIT. When you sell at a profit or loss, your broker calculates the gain or loss and reports it on a 1099 form sent to you and the IRS. You report this on your tax return. If you hold the REIT in a retirement account, you do not report anything until you withdraw money.

Can I buy a REIT that does not trade on a major exchange?

Yes, but it is more complicated. Some REITs trade over-the-counter (OTC) rather than on the NYSE or NASDAQ. These are usually smaller or newer REITs. Your broker may allow OTC purchases, but they often have higher bid-ask spreads (wider price gaps between buy and sell), higher minimum purchases, and less liquidity (harder to sell quickly). Ask your broker whether they support OTC trading before you try to buy an OTC REIT.

What happens to my REIT shares if the company goes bankrupt?

If a REIT files for bankruptcy, your shares may become worthless or worth far less. Shareholders are last in line to recover money — creditors and bondholders are paid first. This is why diversification through a REIT fund reduces risk: if one REIT fails, the fund still holds many others. A single REIT carries more risk of total loss, though bankruptcy is rare among large, established REITs.