Learn › Investing in REITs · 6 min read

How to Buy REITs

A practical walkthrough of how investors buy REITs, from public shares and ETFs to non-traded and private offerings

Buying publicly traded REIT shares

Most investors who buy REITs are buying publicly traded REITs — companies whose shares trade on a stock exchange such as the NYSE or Nasdaq, the same way shares of any other public company do. To buy one, you need a brokerage account, which you can open with almost any online broker by providing some identifying information and choosing an account type, such as an individual taxable account, a joint account, or a retirement account. Once the account is funded, you search for the REIT by its ticker symbol (Realty Income, for example, trades as O), enter how many shares or how many dollars you want to invest, and choose an order type.

A market order buys at the best available current price, while a limit order lets you set the maximum price you are willing to pay. Most brokers now also support fractional shares, so you can invest a fixed dollar amount rather than needing enough money for a full share. A completed trade in a publicly traded REIT typically settles within a day or two, the same as for any other listed stock, at which point the shares belong to you and any future dividends are paid to your account.

Buying a basket at once: REIT ETFs and mutual funds

Rather than researching and picking individual companies, many investors buy a REIT exchange-traded fund (ETF) or mutual fund that holds dozens or hundreds of REITs in one package. These funds trade on an exchange (for ETFs) or are purchased through a fund company or brokerage (for mutual funds), and they spread your money across many property types and companies automatically. ETFs trade throughout the day at a market-determined price, while traditional mutual funds are priced only once, after markets close, based on the value of their underlying holdings.

The tradeoff with either type of fund is that you own the average of its holdings rather than being able to emphasize a specific sector or company. When comparing REIT funds, investors typically look at which index or strategy a fund follows, which sectors it emphasizes, and its expense ratio. See REIT ETFs vs. individual REITs for a closer look at that tradeoff.

Non-traded and private REITs work differently

Not every REIT trades on an exchange. Non-traded REITs are registered with the SEC and file public reports, but their shares do not trade on a stock exchange — they are typically purchased through a broker-dealer or financial professional as part of an ongoing public offering, often with a minimum investment and share prices that update periodically rather than every second. Private REITs are not registered with the SEC at all and are generally limited to institutional or accredited investors, purchased directly through the sponsor.

Both non-traded and private REITs are far less liquid than publicly traded REITs. Instead of selling instantly on an exchange, investors typically rely on periodic share repurchase programs that may be limited or suspended, so getting your money out on a specific timeline is not guaranteed. A related but distinct option is real estate crowdfunding, where online platforms pool money from many individual investors to fund specific properties or portfolios, sometimes through REIT-like vehicles and sometimes through other legal structures. See traded, non-traded, and private REITs and REITs vs. crowdfunding for how these options compare.

The account you use matters for taxes

REITs can be held in an ordinary taxable brokerage account or inside a tax-advantaged account such as an IRA or 401(k). Because REIT dividends are generally taxed as ordinary income rather than at the lower qualified-dividend rate, some investors pay close attention to which account type they use for REIT holdings. Some employer-sponsored retirement plans also include a real estate or REIT fund among their menu of investment options, offering another route to exposure without opening a separate brokerage account. See how REIT dividends are taxed and REITs in IRAs and 401(k)s for how that works — this is general tax information, not a recommendation for your specific situation, and a tax professional can advise on your circumstances.

Doing your homework before you place an order

Placing the order is the easy part; deciding what to buy is the harder part. Before buying a specific REIT, it typically helps to know what property sector it operates in, how it is financed, and how its dividend has been covered historically. Comparing a REIT against others in the same property sector, rather than against the market as a whole, tends to give a more meaningful sense of whether its valuation and yield are in line with companies facing similar demand drivers. Our screener lets you filter REITs by sector, yield, and other data, and the how to analyze a REIT guide walks through a beginner framework for that research.

See it in the data: Browse REITs → REIT sectors →

Research and education only — nothing here is investment advice. Figures such as the 90% distribution rule are general and can change; always confirm against a company's filings.