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 income-producing real estate. When you buy shares of a REIT, you own a piece of that company. Most REITs trade on major stock exchanges like the NYSE or NASDAQ, which means you purchase them through a brokerage account — the same account you would use to buy Apple or Microsoft stock.

The actual purchase takes minutes once your account is open. You search for the REIT's ticker symbol, enter the number of shares you want, and confirm the order. The price fluctuates during market hours, just like any stock. You do not need special permission, a minimum investment amount, or approval from anyone — only a brokerage account with enough cash or buying power to cover the purchase.

The main difference between buying a REIT and buying a regular stock is what you own: a piece of real estate operations and the income they generate, rather than a manufacturing company or tech platform. But the mechanics of the purchase are identical.

Key Takeaways

  • Open a brokerage account with a firm like Fidelity, Charles Schwab, E*TRADE, or Vanguard, then fund it with cash before you can buy shares.
  • Search for the REIT's ticker symbol in your brokerage platform, decide how many shares to buy, and place a market or limit order during trading hours.
  • Publicly traded REITs are liquid — you can sell your shares any trading day — but prices move with the market and are not may provide.
  • REITs typically distribute at least 90 percent of their taxable income to shareholders as dividends, which you will owe taxes on each year.
  • Non-traded REITs exist but charge high fees, lock up your money for years, and are harder to sell; most individual investors stick with publicly traded ones.

Opening a brokerage account

You need a brokerage account before you can buy any REIT. A brokerage is a firm licensed to buy and sell securities on your behalf. Major brokerages include Fidelity, Charles Schwab, E*TRADE, Vanguard, Interactive Brokers, and TD Ameritrade. Each one has a website where you can open an account online in 10 to 20 minutes.

The account opening process asks for your name, address, Social Security number, employment status, and how much money you plan to invest. The brokerage runs a background check and verifies your identity. Once approved — usually within one business day — you can fund the account by linking a bank account or transferring money electronically.

Different brokerages charge different fees for trades, offer different research tools, and have different minimum balances. Some charge nothing per trade; others charge a flat fee per transaction. Compare a few before you choose, but the differences matter less than straightforward opening an account and starting. You can always move money to a different brokerage later if you want to.

Finding and purchasing a specific REIT

Once your account is funded, log into your brokerage platform and look for the "Trade" or "Buy" section. Enter the REIT's ticker symbol — a short code like "SPY" or "VNQ" — into the search box. The platform will show you the current price per share, the trading volume, and a chart of recent price movement.

Decide how many shares you want to buy. If a REIT is trading at $50 per share and you have $5,000 to invest, you can buy 100 shares. You do not have to buy a round number — you can buy 87 shares if you want — and many brokerages now allow fractional shares, meaning you can invest an exact dollar amount like $5,000 and own whatever fraction of a share that equals.

Choose between a market order and a limit order. A market order buys at whatever price the REIT is trading at right now. A limit order lets you set a maximum price you are willing to pay — if the REIT drops to that price, the order fills automatically; if it does not, the order sits open until you cancel it or the market closes. For most investors, a market order is simpler. Review your order one more time, then click "Confirm" or "Submit." The trade executes within seconds during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays).

Understanding the difference between publicly traded and non-traded REITs

Most individual investors buy publicly traded REITs — shares that trade on stock exchanges throughout the day. You can see the price anytime, buy or sell in minutes, and own a liquid investment. These REITs are regulated by the Securities and Exchange Commission (SEC) and must file regular financial reports.

Non-traded REITs do not trade on exchanges. They are sold directly by the company, usually through financial advisors or brokers. They often have high upfront fees (sometimes 10 to 15 percent of your investment), lock your money up for 5 to 10 years, and are difficult to sell before that period ends. The lack of daily pricing means you do not know what your shares are worth until the company decides to value them. Most individual investors avoid non-traded REITs because of these drawbacks, but they exist as an option if you have a very long time horizon and want to work with an advisor.

For the purposes of buying REITs yourself, focus on publicly traded ones. They are easier to research, cheaper to own, and far more flexible.

What happens after you buy: dividends and taxes

REITs are required by law to distribute at least 90 percent of their taxable income to shareholders as dividends. This means you will receive regular payments — usually quarterly — based on how many shares you own. If a REIT pays a $2 annual dividend per share and you own 100 shares, you receive $200 per year, typically in four $50 payments.

These dividends are taxable income. Your brokerage will send you a tax form (usually a 1099-DIV) at the end of the year showing how much you received. You owe federal income tax on that amount, and possibly state income tax depending on where you live. The tax rate depends on whether the dividends are "ordinary" (taxed as regular income) or "may have access to" (taxed at lower capital gains rates). Most REIT dividends are ordinary, meaning they are taxed at your regular income tax rate, which can be higher than the rate for stock dividends.

You also owe capital gains tax if you sell your shares for more than you paid. If you bought 100 shares at $50 each ($5,000 total) and sold them at $60 each ($6,000 total), you owe tax on the $1,000 gain. This is separate from the dividend tax.

Choosing between individual REITs and REIT funds

You can buy shares of individual REITs one at a time, or you can buy a REIT mutual fund or REIT exchange-traded fund (ETF) that holds dozens or hundreds of REITs at once. A fund spreads your money across many properties and property types, reducing the risk that one bad REIT will hurt your portfolio. An individual REIT concentrates your bet on one company's management and properties.

Popular REIT ETFs include VNQ (Vanguard Real Estate ETF), SCHH (Schwab U.S. REIT ETF), and IYR (iShares U.S. Real Estate ETF). These trade like regular stocks — you buy them the same way you buy an individual REIT — but they own a basket of many REITs inside. The expense ratio (the annual fee charged by the fund) is typically 0.1 to 0.4 percent per year, which is very low.

Most beginning investors find REIT funds simpler than picking individual REITs, because you do not have to research each company separately. But both approaches work. The choice depends on whether you want to research specific properties and management teams, or prefer a diversified, hands-off approach.

Common mistakes to avoid

Do not assume a REIT's high dividend yield means it is a bargain. A yield of 8 or 10 percent might sound attractive compared to a 2 percent stock dividend, but it often reflects market concern that the REIT's dividend is unsustainable or that the share price will fall. Always read the REIT's financial statements and understand why the yield is high before you buy.

Do not ignore the tax consequences. Because REIT dividends are usually taxed as ordinary income, holding REITs in a tax-advantaged account like an IRA or 401(k) can save you money. If you hold them in a regular taxable brokerage account, you will owe taxes every year on the dividends, even if you do not sell the shares.

Do not buy a REIT expecting the share price to stay stable. REITs trade like stocks, and their prices move based on interest rates, economic conditions, and investor sentiment. If interest rates rise, REIT prices often fall because investors can get better returns elsewhere. Be prepared for volatility.

Frequently Asked Questions

Do I need a lot of money to start buying REITs?

No. Most brokerages have no minimum investment, and many allow fractional shares. You can invest $100 or $1,000 and own a piece of a REIT. Some brokerages offer commission-free trading, so your entire investment goes toward buying shares rather than paying fees.

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

Yes. You can hold REITs in a traditional IRA, Roth IRA, or 401(k) just like any other stock or fund. This is often a smart move because REIT dividends are taxed as ordinary income, and holding them in a tax-sheltered account avoids that annual tax bill.

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

A REIT is a company that owns or finances real estate. A real estate mutual fund is a basket of many REITs (or sometimes real estate stocks) bundled together. A REIT fund gives you diversification across many properties; an individual REIT concentrates your investment in one company.

How often do REITs pay dividends?

Most REITs pay dividends quarterly — four times per year. Some pay monthly or semi-annually. Your brokerage will show you the dividend payment schedule when you look up the REIT, and you can set up automatic reinvestment if you want dividends to buy more shares instead of being paid to you in cash.

Can I lose money buying a REIT?

Yes. REIT share prices move up and down based on market conditions and the company's performance. If you buy at $50 and the price falls to $40, you have a loss on paper. You only lock in that loss if you sell. Additionally, if a REIT cuts its dividend or goes bankrupt, you could lose part or all of your investment.