Investing in real estate is one of the oldest and most proven ways to build wealth. However, buying physical property requires hundreds of thousands of dollars, dealing with tenants, and handling maintenance issues. Real Estate Investment Trusts (REITs) solve this problem. Here is how REITs work and how you can use them to invest in real estate starting with just $10.
What is a REIT?
A REIT (pronounced “reet”) is a company that owns, operates, or finances income-producing real estate across various sectors (like apartments, offices, shopping malls, hospitals, and warehouses). By law, REITs must **distribute at least 90% of their taxable income to shareholders** in the form of dividends. This makes them excellent cash-flow assets.
How to Invest in REITs
Because most REITs are publicly traded on major stock exchanges (like the NYSE or NASDAQ), you can buy shares in them just like buying individual stocks. You can use zero-commission apps like Robinhood or Webull to purchase shares in a few seconds.
Top REITs to Consider
1. Realty Income (Ticker: O): Known as “The Monthly Dividend Company,” Realty Income owns commercial retail properties (leased to tenants like Walgreens and Dollar General) and pays out dividends to shareholders every single month.
2. Vanguard Real Estate ETF (Ticker: VNQ): Instead of buying a single REIT, this exchange-traded fund holds a diversified basket of over 160 top US REITs, spreading your risk across different property sectors automatically.
Pros & Cons of REITs
Pros:
• High dividend yields.
• Extremely liquid (you can sell your shares instantly).
• Zero landlord responsibilities.
Cons:
• Dividends are taxed as ordinary income (unlike qualified stock dividends).
• Highly sensitive to interest rate hikes.
For beginner investors, starting with a broad real estate ETF like VNQ is the safest way to add property exposure to your portfolio.