You can buy a REIT the same way you buy a stock — through a brokerage account, with money you choose to invest

A REIT (Real Estate Investment Trust) trades on a stock exchange just like Apple or Microsoft. You open a brokerage account, search for the REIT by its ticker symbol, and place a buy order for as many shares as you want. The transaction settles in two business days, and you own it. No landlord duties, no tenant calls, no property taxes to pay — the REIT's management company handles all of that.

The barrier to entry is low: most brokerages have no minimum investment, and a single share of many REITs costs between $50 and $200. You can start with $500 or $5,000 depending on which REIT you choose and how many shares you want to own. The money is yours to lose or gain based on whether the REIT's value rises or falls and whether it pays dividends.

This guide walks you through the steps, the costs you will encounter, and the decisions you need to make before you buy.

Key Takeaways

  • You need a brokerage account (from firms like Fidelity, Charles Schwab, or Vanguard) to buy REIT shares, and opening one takes 10 to 15 minutes online.
  • REITs trade during stock market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays), and you can buy or sell shares when ready at the current market price.
  • Most REITs pay dividends quarterly, and those dividends are taxed as ordinary income, not capital gains, which affects what you owe at tax time.
  • You can hold REITs in a regular taxable account or in a retirement account like an IRA, and the tax treatment differs depending on which account type you use.
  • REIT prices move with the stock market and real estate conditions, so your shares can lose value even if the underlying properties are performing well.

Opening a Brokerage Account

You cannot buy a REIT without a brokerage account — it is the intermediary between you and the stock exchange. Common brokerages include Fidelity, Charles Schwab, E*TRADE, Vanguard, and TD Ameritrade. Each one offers roughly the same core service: a platform where you can buy and sell securities, hold cash, and track your holdings.

To open an account, visit the brokerage's website and click the sign-up button. You will provide your name, Social Security number, address, employment status, and bank details. The process takes 10 to 15 minutes. Most brokerages approve you when ready; some take a business day. You then link a bank account and transfer money in. That money sits in your account as cash until you use it to buy shares.

There is no cost to open an account or hold cash in it. Brokerages make money from trading volume and from lending out shares you hold. You will pay no commission on stock trades at any major brokerage — that changed around 2019, and it remains true today. You will pay a bid-ask spread (the difference between the price you pay and the price you could when ready sell at), but that is built into the market price and is not a separate fee.

Finding and Researching a Specific REIT

REITs are organized by what they own: apartment buildings, office parks, shopping centers, data centers, hospitals, storage units, or hotels. The National Association of Real Estate Investment Trusts (NAREIT) maintains a searchable database on its website where you can filter by property type. You can also search financial websites like Yahoo Finance, Google Finance, or your brokerage's research tools by typing the REIT's name or ticker symbol.

Before you buy, look at three things: the REIT's dividend yield (the annual dividend divided by the share price, shown as a percentage), its price history over the past year or five years, and what properties it owns. A REIT that owns apartment buildings in growing cities behaves differently from one that owns struggling shopping malls. Read the REIT's annual report (called a 10-K filing) or its quarterly earnings report (10-Q filing) — both are free on the SEC's EDGAR database. These documents tell you how much debt the REIT carries, how full its properties are, and what management expects next.

Do not buy based on dividend yield alone. A very high yield can signal that the market thinks the REIT is in trouble and may cut its dividend. Compare the yield to the REIT's peers (other REITs that own similar properties) and to its own history. A yield that is stable or rising is more trustworthy than one that suddenly jumped.

Placing Your First Buy Order

Once you have money in your brokerage account and you have chosen a REIT, you are ready to buy. Log into your account and search for the REIT by its ticker symbol (a four- or five-letter code like "PLD" for Prologis or "AVB" for AvalonBay Communities). Click the ticker to open its detail page.

You will see a "Buy" button. Click it, and a form will appear asking how many shares you want and what type of order you want to place. For a first purchase, use a market order — it buys at the current market price when ready. (A limit order lets you set a maximum price you will pay, but it may not fill if the price moves above your limit.) Enter the number of shares, review the total cost, and click "Submit" or "Confirm." The order executes in seconds during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays).

The shares appear in your account within two business days. You now own them and are may have access to to any dividends the REIT pays. You can sell them anytime the market is open by clicking "Sell," choosing the number of shares, and confirming.

Understanding Dividend Payments and Taxes

Most REITs pay dividends quarterly — four times a year. The amount per share varies by REIT and can change. When a dividend is paid, the cash lands in your brokerage account. You can spend it, reinvest it to buy more shares, or leave it sitting there.

Here is the tax consequence: REIT dividends are taxed as ordinary income, not as capital gains. That means they are taxed at your regular income tax rate (which can be 10%, 12%, 22%, 24%, 32%, 35%, or 37% depending on your income), not at the lower capital gains rate (0%, 15%, or 20%). Your brokerage will send you a Form 1099-DIV at tax time listing all the dividends you received. You report this on your tax return.

If you hold the REIT in a tax-deferred retirement account like a traditional IRA or a 401(k), you do not pay tax on the dividends when they arrive. You pay tax only when you withdraw money from the account in retirement. This is one reason many investors hold REITs in retirement accounts rather than in regular taxable accounts — it defers the tax bill.

Choosing Between a Taxable Account and a Retirement Account

You can buy REITs in two types of accounts: a regular taxable brokerage account or a retirement account (IRA, Roth IRA, 401(k), or similar). The choice affects your taxes and your flexibility.

A taxable account has no contribution limits and no withdrawal restrictions. You can buy and sell whenever you want, and you can withdraw your money anytime without penalty. The downside: you pay tax on dividends every year, and you pay capital gains tax when you sell shares at a profit. This is the right choice if you might need the money within five years or if you want maximum flexibility.

A traditional IRA lets you contribute up to $7,000 per year (or $8,000 if you are 50 or older). Dividends and gains grow tax-free inside the account. You pay tax only when you withdraw money in retirement, and only on the amount you withdraw. The catch: you cannot withdraw before age 59½ without a 10% penalty (with some exceptions). This is the right choice if you are saving for retirement and want to defer taxes.

A Roth IRA works similarly, but you contribute after-tax money and pay no tax on withdrawals in retirement. This is useful if you expect to be in a higher tax bracket later or if you want tax-free growth. The contribution limit is the same as a traditional IRA.

Costs and Fees to Know About

Buying and holding REITs involves fewer fees than owning rental property, but they are not free. Here is what you will encounter:

  • Bid-ask spread: When you buy, you pay slightly more than the last sale price. When you sell, you receive slightly less. This gap (the spread) is typically $0.01 to $0.05 per share on liquid REITs, but can be wider on smaller or less-traded REITs. It is not a separate charge — it is built into the price you see.
  • Brokerage account fees: Most major brokerages charge nothing to hold an account or to buy and sell stocks. Some charge a small fee if your account falls below a minimum balance (often $2,500 to $25,000), but many waive this for new accounts or if you set up direct deposit.
  • Advisory fees: If you use a financial advisor or robo-advisor to manage your account, you will pay an annual fee, typically 0.5% to 1% of your assets. This is optional — you can manage your own account for free.
  • Taxes: Not a fee, but a cost. Dividends are taxed as ordinary income, and capital gains are taxed when you sell. The rate depends on your income and how long you held the shares.

The bid-ask spread is the most direct cost you will face on every trade. On a $100 REIT share with a $0.05 spread, you lose $5 on a 100-share purchase ($0.05 × 100). This is unavoidable, but it is small compared to the fees you would pay on real estate transactions (title insurance, inspections, closing costs, realtor commissions). Over time, if you hold your REIT for years, this one-time cost becomes negligible.

What Happens to Your REIT Investment Over Time

REIT share prices move daily based on supply and demand, just like any stock. If the real estate market is strong, interest rates are falling, or the REIT reports good earnings, the price usually rises. If the opposite happens, the price falls. You have no control over this — it is determined by thousands of buyers and sellers in the market.

Your total return comes from two sources: price appreciation (or depreciation) and dividends. If you buy a REIT at $100 per share, it rises to $110, and it pays $4 in annual dividends, your total return is 14% ($10 gain plus $4 dividend). If the price falls to $90, your total return is negative 6% (a $10 loss minus the $4 dividend). Over long periods, REITs have historically returned around 9% to 10% per year on average, but this varies widely by year and by REIT.

You can hold a REIT indefinitely. Many investors buy and forget, letting dividends reinvest and the shares appreciate. Others trade actively, buying and selling based on price movements. There is no "right" holding period — it depends on your goals and risk tolerance. If you are saving for retirement, a long holding period (10+ years) smooths out short-term price swings. If you need the money in two years, a REIT is riskier because you might be forced to sell during a downturn.

Frequently Asked Questions

Can I buy a REIT through my 401(k) at work?

Yes, if your 401(k) plan offers a self-directed brokerage window or if the plan's investment menu includes a REIT fund. Ask your plan administrator which REITs or REIT funds are available. If your plan does not offer this, you can buy REITs in an IRA instead, which you control yourself.

What is the minimum amount of money I need to start?

There is no formal minimum, but most REITs trade between $50 and $200 per share. If you want to buy 10 shares, you might need $500 to $2,000. Some brokerages offer fractional shares, meaning you can buy $100 worth of a REIT even if one share costs $150. Check your brokerage's policy.

Do I have to reinvest my dividends, or can I take the cash?

You can do either. Most brokerages let you set a dividend reinvestment plan (DRIP) that automatically buys more shares with your dividends, or you can have dividends paid as cash to your account. You pay tax on dividends either way, so choose based on whether you want to grow your position or use the cash for something else.

What happens if a REIT cuts its dividend?

The share price usually falls when a dividend cut is announced, because investors are receiving less income. You still own the shares and can hold them hoping the dividend is restored, or you can sell and move the money elsewhere. A dividend cut does not force you to do anything, but it signals the REIT is facing challenges.

Can I lose all my money in a REIT?

Theoretically yes, but it is rare. A REIT would have to go bankrupt, which requires the value of its properties to fall below the debt it owes. This happens occasionally but is not common. More likely, a REIT's share price falls 20% to 40% during a market downturn, and you recover the loss over time as the market recovers.