📋 Table of Contents
REITs Guide for 2025
Real Estate Investment Trusts (REITs) let investors gain real estate exposure through publicly traded shares, combining real estate returns with stock market liquidity.
How REITs Work
REITs own, operate, or finance income-producing real estate and are legally required to distribute at least 90% of taxable income to shareholders as dividends — often resulting in attractive yields compared to typical stocks.
Types of REITs
| Type | What It Owns |
|---|---|
| Equity REITs | Physical properties (most common type) |
| Mortgage REITs | Real estate debt/mortgages |
| Sector-specific REITs | Focused on one property type (retail, industrial, healthcare, etc.) |
REIT Dividends Have Specific Tax Treatment
Most REIT dividends are taxed as ordinary income rather than qualified dividend rates — worth understanding for tax planning, and a reason some investors hold REITs in tax-advantaged accounts.
Common Mistakes
Chasing REITs purely for high yield without evaluating the underlying property portfolio's quality and the company's balance sheet health.
Frequently Asked Questions
Yes — REITs offer one of the most accessible entry points into real estate investing, with no minimum beyond the share price and no property management responsibilities.
Most REIT dividends are taxed as ordinary income rather than the lower qualified dividend rate — some investors hold REITs in tax-advantaged accounts like an IRA for this reason.