How you buy a REIT depends on whether you want individual properties or a diversified fund
You can buy REITs in three ways: as individual REIT shares through a brokerage account, as part of a mutual fund or exchange-traded fund (ETF) that holds multiple REITs, or through a direct investment in a non-traded REIT sold by a financial advisor. Each route has different costs, liquidity, and minimum investment amounts. The choice depends on how much money you have to start, how quickly you might need the money back, and whether you want to pick specific properties or let a fund manager do it.
Individual REIT shares trade on stock exchanges like the New York Stock Exchange and NASDAQ, so you can buy and sell them during market hours the same way you would buy a stock. REIT mutual funds and ETFs bundle dozens or hundreds of REITs into one holding, spreading your money across real estate types and geographic regions. Non-traded REITs are sold directly by advisors and do not trade on an exchange, which means you cannot sell them quickly and they often charge higher upfront fees.
Key Takeaways
- Individual REIT shares require a brokerage account and can be bought and sold during market hours with no minimum investment beyond the share price.
- REIT mutual funds and ETFs let you own dozens of properties with one purchase and cost between 0.05% and 1% per year in fees, depending on whether the fund is actively managed.
- Non-traded REITs have higher upfront costs (often 7% to 10% in sales commissions) and lock your money in for years, making them the slowest to exit.
- You can hold REITs in a regular taxable brokerage account, a retirement account like an IRA or 401(k), or both.
Opening a brokerage account to buy individual REIT shares
To buy individual REIT shares, you need a brokerage account with a firm that offers stock trading. Common brokerages include Fidelity, Charles Schwab, E*TRADE, Interactive Brokers, and Robinhood, though many others exist. You can open an account online in minutes by providing your name, address, Social Security number, and employment information. The brokerage will verify your identity and ask how you plan to fund the account.
Once your account is open and funded, you can search for REIT ticker symbols (four-letter codes like VICI for Vici Properties or O for Realty Income) and place a buy order during market hours. You pay a share price that changes throughout the day, plus any trading commission your brokerage charges. Most major brokerages now charge zero commission per trade, though some smaller or older platforms may still charge $5 to $10 per transaction.
Individual REIT shares have no minimum investment beyond the cost of one share, which can range from $20 to $150 depending on the REIT. You can buy one share or one hundred. The downside is that you own only that one REIT, so your return depends entirely on how that specific company performs. If the REIT cuts its dividend or the property market in its region declines, your holding suffers.
Buying REIT mutual funds and ETFs for diversification
A REIT mutual fund is a pool of money managed by a professional who buys and sells REIT shares on your behalf. A REIT ETF works similarly but trades on an exchange like a stock, meaning you can buy and sell it during market hours at a price that changes throughout the day. Both give you exposure to dozens or hundreds of REITs in one purchase, spreading your risk across property types (office, retail, residential, industrial) and regions.
To buy a mutual fund, you can go through your brokerage account or directly through the fund company (like Vanguard, Fidelity, or Schwab). You choose how much to invest — many funds have minimums of $1,000 to $3,000, though some have no minimum if you set up automatic monthly deposits. The fund company buys and sells REITs inside the fund, and you receive a share of any dividends the REITs pay out.
ETFs work the same way but trade like stocks, so you can buy one share at a time and see the price change minute by minute. ETFs typically have lower annual fees than actively managed mutual funds. An actively managed REIT mutual fund might cost 0.50% to 1.00% per year, while a REIT index ETF (which straightforward tracks a published index of REITs) might cost 0.05% to 0.20% per year. Over decades, that fee difference compounds significantly.
Both mutual funds and ETFs let you sell whenever you want during market hours, so your money is liquid. If you need cash in an emergency, you can sell the next trading day. This makes them more flexible than non-traded REITs.
Non-traded REITs: higher costs and longer lock-in periods
A non-traded REIT is sold directly by a financial advisor and does not trade on a public exchange. You cannot sell it whenever you want. Instead, the REIT may offer a redemption window once or twice a year where you can sell back your shares to the company at a price it sets. Some non-traded REITs eventually go public or are sold to another company, which is when you get your money out.
Non-traded REITs typically charge a sales commission of 7% to 10% upfront, meaning if you invest $10,000, the REIT company keeps $700 to $1,000 when ready and invests the remaining $9,000 to $9,300. They also charge annual management fees of 1% to 2%. Because of these high costs, your investment needs to grow significantly just to break even with what you would have earned in a traded REIT or ETF.
The main reason advisors sell non-traded REITs is the commission they earn. For you, the benefit is supposed to be access to properties you cannot buy through public markets — sometimes newer developments or properties in specific regions. In practice, many non-traded REITs underperform public ones, and the high fees eat into returns. They are generally recommended only if you have a long time horizon (10+ years) and do not expect to need the money.
Holding REITs in retirement accounts versus taxable accounts
You can buy REITs in a regular taxable brokerage account, where you pay capital gains tax when you sell at a profit and income tax on dividends each year. You can also buy them inside a retirement account like a traditional IRA, Roth IRA, or 401(k). The advantage of a retirement account is that dividends and capital gains grow tax-deferred (or tax-free in a Roth), so you do not owe taxes until you withdraw the money in retirement.
REIT dividends are taxed as ordinary income, not as capital gains, which means they are taxed at your regular income tax rate rather than the lower capital gains rate. Because of this, many investors prefer to hold REITs in retirement accounts where the tax is deferred. If you hold REITs in a taxable account, you will owe income tax on the dividends every year, even if you reinvest them.
Most brokerages let you open both a taxable account and a retirement account, so you can split your REIT holdings between them. For example, you might buy REIT ETFs in a Roth IRA for tax-free growth and hold individual REIT shares in a taxable account for flexibility and access to capital losses (which can offset other gains).
Comparing costs across the three routes
| Route | Upfront Cost | Annual Fee | Minimum Investment | Liquidity |
|---|---|---|---|---|
| Individual REIT shares | $0 (most brokerages) | $0 | Cost of one share ($20–$150) | Sell anytime during market hours |
| REIT mutual fund | $0–2% (load) | 0.50%–1.00% | $1,000–$3,000 | Sell anytime; settle in 1–2 days |
| REIT ETF | $0 | 0.05%–0.20% | Cost of one share ($20–$100) | Sell anytime during market hours |
| Non-traded REIT | 7%–10% | 1%–2% | $2,500–$25,000 | Redemption window 1–2x per year or wait for exit event |
The table shows why most individual investors choose either individual REIT shares or REIT ETFs. Both have zero upfront costs and low or no annual fees. The difference is diversification: one share gives you one REIT, while an ETF gives you dozens. A REIT mutual fund with a load (upfront sales charge) can cost 2% to 5% upfront, which is why no-load funds and ETFs have become more popular.
Steps to buy your first REIT or REIT fund
- Choose your account type: taxable brokerage, IRA, 401(k), or a combination.
- Open an account with a brokerage (Fidelity, Schwab, E*TRADE, etc.) if you do not already have one. This takes 10–15 minutes online.
- Fund your account by linking a bank account or transferring money from another investment account.
- Decide whether you want individual REIT shares, a REIT mutual fund, or a REIT ETF. If you are unsure, an ETF is the simplest starting point.
- Search for the REIT or fund by name or ticker symbol in your brokerage's search bar.
- Review the fund's holdings (if buying a fund) or the REIT's dividend history and property portfolio (if buying individual shares).
- Place a buy order for the number of shares you want. For mutual funds, you specify a dollar amount; for stocks and ETFs, you specify a share count.
- Confirm the order. The trade settles within one to three business days, and the shares appear in your account.
Frequently Asked Questions
Do I need a lot of money to start buying REITs?
No. You can buy a single share of a REIT or REIT ETF for $20 to $100, depending on the share price. Some REIT mutual funds have $1,000 minimums, but many brokerages waive that if you set up automatic monthly deposits of $50 or $100. Start with whatever amount you can afford and add to it over time.
What is the difference between a REIT mutual fund and a REIT ETF?
Both hold dozens of REITs, but ETFs trade like stocks during market hours and usually have lower annual fees (0.05%–0.20% versus 0.50%–1.00%). Mutual funds are priced once per day after the market closes. For most people, an ETF is simpler and cheaper, but either works if you are buying and holding long-term.
Can I buy REITs inside my 401(k) or IRA?
Yes, if your plan or IRA provider offers a brokerage window or self-directed option. Many employer 401(k) plans do not, so check with your plan administrator. IRAs almost always allow you to buy individual stocks, mutual funds, and ETFs, including REITs. Holding REITs in a retirement account is often better because dividends are taxed as ordinary income.
Should I buy individual REIT shares or a REIT fund?
A fund spreads your risk across many properties and companies, so one REIT's poor performance does not sink your whole investment. Individual shares let you pick specific REITs and own them outright, but you need to research each one. If you are new to REITs, a fund is simpler and safer.
What happens if a REIT cuts its dividend?
The share price usually falls because investors buy REITs partly for the dividend income. If you own the REIT, your income drops. If you own a REIT fund, the fund's dividend drops but you still own dozens of other REITs, so the impact is smaller. This is another reason funds reduce risk.