How to Buy REITs: A Comprehensive Guide

Your Guide to buying the best REITs


A Real Estate Investment Trust (REIT) is an investment vehicle that pools capital from individuals and institutions and invests that capital in a portfolio of real estate assets. REITs allow investors to gain exposure to the real estate market without the requirement of owning and managing physical property. Investing in REITs has become increasingly popular over the years, and this buying guide provides investors with a comprehensive overview of REITs and the process of purchasing shares. From understanding different REIT types and how to assess the financial performance of a REIT, to understanding the risks and rewards of investing in REITs, this guide will provide investors with the necessary knowledge and resources to make an informed decision when purchasing REITs.

Key features

  1. REIT Management - Shoppers should consider the track record of the REIT management company. Look into their past performance, any awards they may have won, and the fees they charge.
  2. Income Potential - Consider how much income a REIT may generate for its investors, and the potential for increasing income in the future.
  3. Diversification - Investing in REITs can offer investors the ability to diversify their portfolio, as REITs provide exposure to a variety of asset classes.
  4. Liquidity - Most REITs are traded on exchanges, meaning they can be bought and sold in the same way as any other publicly traded security. Investing in REITs may provide investors with more liquidity than investing in other types of real estate.
  5. Risk/Reward Profile - Evaluate the risk/reward profile of investing in REITs. Factors such as the interest rate environment, taxes, and inflation may impact the potential return on investments.
  6. Fees - Look at the fees associated with investing in REITs. Fees can include management fees, administrative fees, and other associated costs.
  7. Location - Consider the geographic location of the REIT and the associated risks and rewards that may come with investing in a certain area.

See the most popular REITs on Amazon

Important considerations


  • High Dividend Yields - REITs generally pay out much higher dividend yields than other investment vehicles, making them attractive for investors looking for regular income.
  • Portfolio Diversification - REITs are an asset class separate from stocks and bonds, so investing in REITs can help diversify your portfolio and reduce your risk.
  • Long-Term Appreciation - REITs tend to appreciate over time, giving investors an opportunity to benefit from the potential for long-term capital gains.
  • Liquidity - REITs are generally liquid investments, meaning you can easily buy and sell them, and you don’t need to worry about the illiquidity of other real estate investments.
  • Regulated & Transparent - REITs are publically traded, so they are highly regulated and the performance of the REITs is easily monitored and tracked.


  • High Entry Cost – Purchasing REITs can come with a high entry cost, with some individual REITs costing several thousand dollars. This makes them inaccessible to those with smaller budgets.
  • Taxes – REITs must pay out a certain amount of their profits as dividends each year, and these dividends are taxed accordingly.
  • Risk of Loss – As with any investment, there is a risk of loss when it comes to REITs, which could be from a drop in property values or from difficulties in the rental market.
  • Volatility – REITs are subject to market volatility, meaning that they can experience short-term losses even when the real estate market is doing well.
  • Management Fees – Many REITs come with management fees that can take up a significant portion of the investor’s profits.
  • Lack of Control – Investors in REITs have limited control over how their money is managed, as the decisions are generally made by the REIT management team.

Best alternatives

  1. Mutual Funds - professionally managed funds that pool money to buy a variety of investments such as stocks, bonds and commodities.
  2. Exchange-Traded Funds (ETFs) - baskets of investments like stocks and bonds that are traded on exchanges and priced throughout the day.
  3. Closed-End Funds - professionally managed funds that are similar to mutual funds, but their shares are bought and sold at a fixed price.
  4. Real Estate Securities - stocks and bonds of companies that own real estate.
  5. Real Estate Investment Trusts (REITs) - professionally managed investments that own and operate real estate.
  6. Real Estate Investment Partnerships - investments in real estate that are sold by partnership agreements.

Related tools, supplies, and accessories

  • Real Estate Investing Software - Programs to help investors manage and analyze their REIT portfolios.
  • Research Materials - Guides, reports, and other materials that help investors evaluate and understand the REIT market.
  • Financial Calculators - Tools to help investors calculate returns, evaluate risks, and perform other financial calculations related to REIT investments.
  • Investment Brokers - Professionals who help investors buy and sell REITs.
  • Online Trading Platforms - Websites and apps that allow investors to buy and sell REITs.
  • Technical Indicators - Charts, statistics, and other data that help investors understand the performance of REITs over time.

Common questions

  1. What are REITs? REITs (Real Estate Investment Trusts) are companies that purchase, manage, and develop a portfolio of income-producing real estate properties and mortgages.
  2. What types of REITs are there? There are several types of REITs, including Equity REITs, Mortgage REITs, Hybrid REITs, and REIT ETFs.
  3. What are the benefits of investing in REITs? The main benefit of investing in REITs is the potential for high returns. Additionally, REITs provide investors with diversification, liquidity, and tax advantages.
  4. What kinds of fees are associated with REITs? REITs may be subject to various fees, including management fees, administrative fees, and fees related to the buying and selling of REITs.
  5. What risks are associated with REITs? The main risk with REITs is that their value can fluctuate based on changes in the economy and real estate markets. Additionally, REITs may be subject to liquidity risk, inflation risk, and interest rate risk.
  6. How much money do you need to invest in REITs? The amount of money needed to invest in REITs will depend on the type of REIT you choose and the specific investment strategy you choose. Generally, you can begin investing in REITs with as little as $500.
  7. What is the difference between a mutual fund and a REIT? The primary difference between a mutual fund and a REIT is that a mutual fund invests in stocks and bonds, while a REIT invests in income-producing real estate. Additionally, REITs have the potential to generate higher returns than mutual funds, though they also come with greater risks.


A funny fact about REITs is that in the 1970s, a group of investors tried to establish a new REIT called the "Nacho Cheese REIT". Unfortunately, the plan was never carried out and the REIT never became a reality. However, the name lives on in the REIT community as a reminder of the power of imagination and the potential that REITs can have. Source:

Disclaimer: This buying guide was not created by humans, and it is possible that some of it's content is inaccurate or incomplete. We do not guarantee or take any liability for the accuracy of this buying guide. Additionally, the images on this page were generated by AI and may not accurately represent the product that is being discussed. We have tried to convey useful information, but it is our subjective opinion and should not be taken as complete or factual.