When people think of real estate investing, they picture buying houses, flipping them, renting them out, dealing with repairs, and fielding 2 a.m. plumbing emergencies. But there’s another way to invest in real estate—without owning a single property or swinging a hammer.
REIT stands for Real Estate Investment Trust. It’s a way to invest in income-producing real estate without the hands-on hassle. REITs are one of the easiest and most accessible passive income options for beginners.
Here’s what they are, how they work, and why they deserve a spot in your investment plan.
A REIT is a company that owns, operates, or finances income-generating real estate. These can include:
Think of a REIT like a mutual fund, but for real estate. When you invest in a REIT, you're buying shares of a company that collects rent, pays expenses, and distributes profits to shareholders—you—in the form of dividends.
In 1960, the U.S. government created REITs to give regular people access to real estate investing—without needing hundreds of thousands of dollars to buy property. Today, REITs are publicly traded like any other stock. You can buy and sell them easily through your brokerage account.
REITs earn revenue primarily from:
Here’s the kicker: REITs are legally required to pay out at least 90% of their taxable income to shareholders as dividends. That makes them a favourite for income-focused investors.
There are three main types of REITs:
They own and operate physical properties. They make money from rent and property appreciation. Examples:
They don’t own property. Instead, they finance property by buying or originating mortgages. They earn money from the interest on those loans. Higher risk, higher yield.
They do both—own properties and finance mortgages. Less common, but some investors like the diversification.
Most REITs pay dividends quarterly. Some pay monthly. You get consistent income without managing a property.
REITs give you exposure to real estate—a completely different asset class than stocks or bonds.
Unlike physical real estate, REITs are publicly traded. You can buy and sell them instantly.
You can start investing in REITs with as little as $10–$100.
Rents and property values tend to rise with inflation. REITs often pass those increases to shareholders.
| Feature | REITs | Rental Property |
|---|---|---|
| Hands-off? | ✅ | ❌ |
| Start-up cost | Low | High |
| Liquidity | High | Low |
| Diversification | Easy | Difficult |
| Tax benefits | Limited | Stronger (depreciation, deductions) |
| Control | None | Full |
Bottom line: REITs give you real estate exposure without real estate headaches.
Use any brokerage (Fidelity, Robinhood, Schwab, etc.). Search for publicly traded REITs.
Popular REITs include:
These are funds that invest in dozens or hundreds of REITs at once, giving you instant diversification.
Examples:
Platforms like Fundrise or RealtyMogul offer access to private REITs. These aren’t traded on the stock market and often require a longer-term commitment (e.g. 5+ years), but they offer more direct real estate exposure and sometimes higher returns.
No investment is perfect. Here are the risks:
If you want passive income, real estate exposure, and easy access without the complexity of owning property, REITs are a no-brainer.
They’re especially good for:
Start small. Pick one or two REITs or an ETF. Set up automatic reinvestment. Over time, it adds up.