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, including maintenance and property management. However, real estate investment trusts (REITs) allow individuals to participate in the real estate market without the need to buy physical properties. REITs cater to investors with varying budgets, but the requirements for how much to invest in REITs primarily depend on whether the REIT is traded publicly on a stock exchange or whether it is a private investment opportunity.

A financial advisor can help you evaluate REITs and other real estate 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.

First introduced in the United States in 1960, REITs were designed to afford everyday investors access to large-scale, diversified portfolios of income-producing real estate. The introduction of REITs allowed average investors the chance to reap benefits from real estate without the enormous amounts of capital and resources it takes to purchase and manage a property.

REITs operate by collecting money from investors to buy, lease and sell income-generating real estate. They are organized as corporations and are legally obliged to 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 its 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 its total assets in real estate and cash
Generate at least 75% of its gross income from rents, mortgage interest or other real estate-rated 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, public REITs 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. 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, on the other hand, 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 made 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, or $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 licenses.

Since they aren’t publicly available and don’t register with the SEC, it’s difficult to pinpoint specific investment minimums. However, investment firm Edward Jones says minimum investments for private REITs can range 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 and 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 owned by the REITs appreciate in value, the share prices of the REIT can also increase, potentially providing 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, such as 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, it’s not guaranteed that they will consistently eclipse the broader market.

Benefits of Investing in a REIT

REIT investments carry several potential benefits, such as 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 while generating a regular income stream through their dividend payouts.

Unlike owning physical real estate, buying and selling public REIT shares is easy and can be done quickly on stock exchanges, providing investors with liquidity and flexibility. Public REITs are also required to provide regular financial reports and disclosures, offering 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 instance, REITs do not grant you control over the properties managed by the trust. Unlike direct property ownership, investors in REITs cannot chime in on decisions about the properties, such as their management or when to purchase or sell. This leaves investors dependent on the REIT’s administration for these decisions.

Another potential downside 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 but offers enhanced liquidity and simplicity of diversification. Both options carry their unique set of pros and cons, and the right one for you will depend on your individual circumstances, financial objectives and risk tolerance.

How to Invest in REITs: Step-by-Step

To add REITs to your portfolio, it’s first helpful to understand the process. 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 low fees.

2. Research and Select a REIT

Decide the type of REIT that you want to invest in, whether it is an individual publicly traded REIT, an REIT mutual fund or ETF or a non-traded or private REIT.

Individual publicly traded REITs: 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 and may have higher minimum investments and liquidity restrictions.

Review each REIT’s dividend history, property portfolio, management team and financial health before investing.

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, 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, resulting in lower fees.
REIT Mutual Funds: Managed funds that invest in a variety of REITs — ideal for diversification without picking individual stocks.
REIT ETFs: Exchange-traded funds that track an index of REITs and can be bought and sold throughout the day like stocks.

Whether you choose to buy individual shares, invest through funds or use a direct purchase program, REITs can be an accessible and effective way to gain exposure to real estate and diversify your portfolio.

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 can be easily purchased through a broker or direct purchase program, individual investors can invest in private REITs only if they are considered accredited investors or work in the financial sector. Minimum investments for non-traded REITs, meanwhile, may be more than public REITs but less than their private counterparts.

Ask a financial advisor whether REITs are right for your portfolio and how they can contribute to your long-term financial objectives over time.

Portfolio Management Tips

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