Real Estate Investment Trusts: How REITs Work and Where to Start

When you invest in a real estate investment trust, a company that owns or finances income-producing real estate. Also known as REITs, it lets you earn rental income and property appreciation without buying a single building. You’re not a landlord—you’re a shareholder in a portfolio of apartments, malls, warehouses, or even cell towers. And unlike buying a house, you can start with as little as $10.

REITs are required by law to pay out at least 90% of their taxable income as dividends, which makes them one of the few investments that reliably turn property into cash flow. That’s why they’re popular with people who want passive income without managing tenants or fixing leaky roofs. There are different types: equity REITs, companies that own and operate physical properties like shopping centers and apartments, and mortgage REITs, firms that lend money to real estate owners or buy existing loans. Equity REITs are the most common and stable—they earn rent. Mortgage REITs are riskier—they earn interest, and their value swings with interest rates.

REITs don’t just sit in a corner of your portfolio—they connect to other things you already know. If you’ve used a robo-advisor, an automated platform that builds and manages investment portfolios, chances are it already holds REITs in its ESG or income-focused funds. You don’t need to pick individual REITs to benefit. Many investors use them to balance stocks and bonds, especially when inflation is high, because real estate tends to hold its value. And if you’ve ever heard of dollar-cost averaging, investing fixed amounts regularly to reduce timing risk, REITs are perfect for it. You can set up automatic purchases through your brokerage, just like you do with ETFs.

They’re not magic. REITs can drop in value when interest rates rise, because higher rates make bonds more attractive. Some REITs, like those tied to malls or office space, have struggled since the pandemic. But others—like data centers, logistics warehouses, and senior housing—have grown fast. The key is diversification: don’t put all your money in one type. And don’t chase the highest dividend yield—it often means the company is struggling to stay afloat.

What you’ll find below are clear, no-fluff guides on how to pick REITs, how they fit with other investments like bonds and ETFs, and why they’re one of the easiest ways for tech-savvy women to build long-term wealth without leaving their laptop. No jargon. No sales pitches. Just what works.