REIT Funds: How to Invest in Real Estate Without Buying Property

When you think of real estate investing, you probably picture buying a house, renting it out, and dealing with leaky faucets. But there’s a simpler way: REIT funds, a type of investment fund that owns and manages income-producing real estate like apartments, malls, and warehouses. Also known as real estate investment trusts, they let you own a slice of commercial properties without the hassle of being a landlord. REIT funds trade like stocks, so you can buy them through your brokerage account—no down payment, no property management, no midnight calls about broken heaters.

What makes them stand out? Dividend income, regular cash payments from rental earnings that REITs are legally required to distribute. By law, they must pay out at least 90% of their taxable income to shareholders. That means if a REIT fund earns $1 million in rent, $900,000 goes straight to you. Most pay monthly or quarterly, making them one of the few investments that act like a paycheck from real estate. And because they’re diversified across dozens or hundreds of properties, one tenant moving out won’t sink your returns.

They’re not magic, though. Portfolio diversification, spreading your money across different asset types to reduce risk is why most investors add REIT funds to their mix. They don’t move the same way as stocks or bonds. When the stock market drops, office buildings or storage units might still be full. That’s why even big investors like Vanguard and Fidelity include them in target-date funds. But they’re sensitive to interest rates—when the Fed raises rates, REIT prices often dip because borrowing costs go up. That’s not a flaw; it’s just how they work.

You’ll find REIT funds in almost every type of portfolio: retirees want their steady payouts, young investors use them for long-term growth, and even those building emergency funds sometimes park cash in low-volatility REITs. They’re not just for people who want to own buildings—they’re for anyone who wants to own a piece of the economy’s physical backbone: warehouses storing your Amazon orders, apartments housing your coworkers, shopping centers where your friends shop.

Below, you’ll find real-world breakdowns of how REIT funds actually perform, which ones pay the best dividends, how they compare to owning stocks or bonds, and why some investors lose money by chasing high yields without understanding the risks. Whether you’re new to investing or just looking to add more income to your portfolio, these guides cut through the noise and show you exactly how to use REIT funds without falling for the hype.