How Much Money You Need to Invest in REITs

Investing in real estate has long been seen as a traditional path to wealth, but it comes with its fair share of expenses and responsibilities. Real estate investment trusts (REITs) allow individuals to participate in the real estate market without actually needing to buy physical properties. It’s an opportunity accessible to investors with varying budgets. However, exact requirements for how much to invest in REITs depend largely on whether the REIT is publicly traded or a private investment opportunity.

A financial advisor can help you evaluate REITs and other real estate investments for your portfolio.

What Is a Real Estate Investment Trust?

Fundamentally, a REIT is a company that owns, operates or finances income-producing real estate. They were first introduced in the United States in 1960 as a way for everyday investors to access to large-scale, diversified portfolios of income-producing real estate. Their introduction gave average investors the chance to reap benefits from real estate without the enormous amounts of capital and resources necessary to purchase and manage a property.

Organized as corporations, REITs operate by collecting money from investors to buy, lease and sell income-generating real estate. REITs are legally obligated distribute at least 90% of their taxable income to shareholders annually in the form of dividends.

According to the SEC, REITs also must:

Be structured as a corporation
Have a board of directors or board of trustees
Have shares that are fully transferable
Have at least 100 shareholders after the first year
Have at least 50% of shares held by more than five individuals during the second half of the tax year
Invest at least 75% of total assets in real estate and cash
Generate at least 75% of gross income from rents, mortgage interest or other real estate-related sources

How Much Money You Need to Invest in a REIT

Determining the financial threshold for investing in a REIT may depend on the type of REIT you are looking to invest in. There are three primary variations: public, private and non-traded.

Public REITs

Publicly traded REITs are the most accessible option for investors. They are listed on stock exchanges, making them highly liquid. Because they’re listed on U.S. stock exchanges, they are subject to oversight by the Securities and Exchange Commission (SEC).

You can start investing in public REITs with as little as the price of a single share, plus any associated brokerage fees. However, some public REITs may require a minimum investment in certain circumstances. For example, Realty Income, which specializes in commercial leasing, requires a $1,500 minimum investment when purchasing shares through the company’s direct stock purchase program.

Private REITs

Private REITs often require a more substantial initial investment. These are not traded on public exchanges and are typically offered through private placements.

Unlike public REITs, these private investments are typically only available to accredited investors and institutional investors. For individuals to be considered accredited investors, they must have a minimum net worth of $1 million (excluding their primary residence), or an income of $200,000 annually ($300,00 if married). According to the SEC, investment professionals can also qualify as accredited investors if they are in good standing and hold a Series 7, Series 65 or Series 82 license.

Since these REITs aren’t publicly available and don’t register with the SEC, it’s difficult to pinpoint specific investment minimums. According to investment firm Edward Jones, minimum investments can range anywhere from $1,000 to $50,000.

Non-Traded REITs

Non-traded REITs are a lesser-known category. While they aren’t listed on stock exchanges, non-traded REITs are required to register with the SEC. As such, they are subject to more oversight than private REITs.

According to the National Association of Real Estate Investment Trusts (Nareit), non-traded REITs typically require a minimum investment of $1,000 to $2,500.

Expected Return When Investing in a REIT

REITs may own and operate a variety of properties, including apartment complexes like this one.

Investing in a REIT can offer several potential benefits to investors seeking a diversified portfolio.

One of the key attractions is the potential for a stable and predictable income stream. Moreover, the potential for capital appreciation in REIT investments is another notable advantage. As properties that REITs own appreciate in value, the share prices of the REIT can also increase. This can potentially provide investors with capital gains over time.

The FTSE Nareit All Equity REITs Index, which tracks the performance of all publicly traded REITs in the U.S., had an average annual total return (dividends included) of 6.10% during the period that ended in July 2025.

Yet, like any investment avenue, the return on REITs can be influenced by several factors. Specifically, this includes market conditions, the efficiency of the REIT’s management and the location and condition of properties in the REIT’s portfolio. As an example, the S&P 500 Index’s average annual total return for 2025 was about 6.43%.

This implies that while REITs might deliver steady returns, there’s no gurantee they will consistently eclipse the broader market.

Benefits of Investing in a REIT

REIT investments carry several potential benefits, including diversification, liquidity and potential passive income.

Due to their investment in a diverse array of properties across different sectors, REITs can provide exposure to the real estate market without the obligation of direct property ownership. This could markedly diversify an investor’s portfolio and dilute risk. At the same time, an REIT could generate a regular income stream through dividend payouts.

Unlike owning physical real estate, buying and selling public REIT shares is easy. Investors can quickly do so on stock exchanges, providing with liquidity and flexibility. Public REITs are also required to provide regular financial reports and disclosures, which gives investors transparency and visibility into their investments.

Drawbacks of Investing in a REIT Over Other Real Estate

While REITs do confer specific benefits, there are potential downsides. For one, REITs do not grant investors control over the properties that the REIT manages. Unlike with direct property ownership, investors in REITs cannot chime in on decisions about the properties, such as management or the timing of purchase or sale. This leaves investors dependent on the REIT’s administration for these decisions.

Another potential downside of REITS is the risk of market volatility, characteristic of all publicly traded securities. The share price of public REITs can fluctuate, influenced by market sentiment, economic data and other factors. This can result in periods of price turbulence, which could impact the value of your investment in a REIT.

Compared with direct real estate ownership, investing in REITs provides less control and potential for personal usage of the properties. At the same time, though, it offers enhanced liquidity and simplicity of diversification. Both options carry their unique set of pros and cons. The right one for you will depend on your individual circumstances, financial objectives and risk tolerance.

How to Invest in REITs: Step-by-Step

This step-by-step guide can help you invest in REITs while providing a quick overview of your options.

1. Open a Brokerage Account

The easiest way to invest in REITs, especially publicly traded ones, is through a brokerage account. If you do not already have one, you can open an account online with a traditional brokerage or a low-cost online platform. Look for an account that offers access to U.S. stock exchanges and that has low fees.

2. Research and Select a REIT

Next, decide which type of REIT that you want to invest in:

Individual publicly traded REITs. These allow you to choose specific companies focused on sectors you like, such as residential, retail or healthcare sectors.
REIT mutual funds or ETFs. These funds pool money from many investors and provide instant diversification across multiple REITs.
Non-traded or private REITs. These are usually available through a financial advisor. They may have higher minimum investments and liquidity restrictions.

Before investing, make sure to review each REIT’s dividend history, property portfolio, management team and financial health.

3. Place Your Order

If you’re buying a publicly traded REIT or a REIT ETF, simply enter the ticker symbol in your brokerage account and decide how many shares you want to purchase. Orders are executed in the same manner as any other stock transaction.

4. Monitor Your Investment

After investing, be sure to track your REIT’s performance over time. Watch for changes in dividends and share price while observing broader market conditions. Consider reinvesting dividends to compound your returns over time.

Other Ways to Invest in REITs

There are a few other ways to invest in REITs:

Direct purchase programs. Some REITs allow you to buy shares directly from the company without a broker. This can result in lower fees.
REIT mutual funds. These managed funds invest in a variety of REITs. This is ideal for gaining diversification without picking individual stocks.
REIT ETFs. REIT ETFs, as the name suggests, are exchange-traded funds that track an index of REITs. You can buy and sell them throughout the day just like stocks.

Where Do REIT Dividends Come From?

One reason that many investors consider REITs is their potential to generate regular dividend income. Unlike many publicly traded companies that may retain a large share of their earnings for expansion, REITs generally distribute most of their taxable income to shareholders each year to maintain their tax status.

Those distributions are supported by the income the REIT earns from its underlying real estate holdings. For an equity REIT, that income often comes from rent paid by tenants occupying apartments, office buildings, shopping centers, warehouses or other commercial properties. Mortgage REITs, by comparison, primarily generate income from interest on real estate loans.

The amount a REIT pays in dividends can change over time. Occupancy rates, rental income, financing costs, property sales and acquisitions, not to mention broader economic conditions, can all affect the cash available for distribution. As a result, there is no guarantee of dividend payments. They may increase, decrease or remain unchanged from year to year.

Because of this, investors often evaluate more than just a REIT’s dividend yield when comparing investment options. Looking at the consistency of past distributions, the quality of the underlying properties and the REIT’s financial condition can provide additional context about how the company has generated income over time.

For investors who do not need current income, dividend reinvestment may provide another way to build a position. Reinvesting distributions to purchase additional shares can increase the number of shares an investor owns over time. This means future dividends are paid on a larger investment, assuming the REIT continues making distributions.

Bottom Line

Some REITs may specialize in commercial real estate and office space.

Knowing how much to invest in REITs ultimately depends on whether the trust is public, private or non-traded. While public REITs are traded on stock exchanges and are easily purchasable through a broker or direct purchase program, individual investors can invest in private REITs only if they are accredited investors or work in the financial sector. Minimum investments for non-traded REITs, meanwhile, may be higher than those of public REITs but are often less than those of their private counterparts.

Portfolio Management Tips

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Tax efficiency is an important component of portfolio management. SmartAsset’s capital gains calculator can help you estimate how much you may owe on taxes when selling an asset. And remember, offsetting gains with tax loss harvesting can help you lower your tax liability.