REITs—Real Estate Investment Trusts—are companies that own or finance income-generating real estate. By investing in a REIT, you buy shares of a real estate portfolio that's managed by professionals. These shares trade like stocks, often pay steady dividends, and give you access to the real estate market without needing to buy property yourself.

Historical Performance of REITs

Over the long haul, REITs have delivered competitive returns. They’ve historically outpaced many traditional stocks, especially when dividends are factored in. This steady income stream is part of what makes them attractive to individual investors.

1. Retail REITs

These REITs own and manage shopping centers, malls, and freestanding retail stores. Their success depends on consumer spending habits and retail trends. As shopping behaviors shift toward e-commerce, location and tenant mix are critical to performance.

2. Residential REITs

Focused on apartment buildings, manufactured housing, and single-family rentals, residential REITs thrive in markets with high demand and limited supply. Watch for job growth, population trends, and affordability metrics when evaluating these.

3. Healthcare REITs

Healthcare REITs invest in hospitals, medical centers, nursing homes, and assisted living facilities. As the population ages, demand for medical services and facilities continues to rise—making this a long-term play.

4. Office REITs

These REITs lease office buildings to tenants. Their profitability hinges on occupancy rates, lease terms, and the health of the job market. Keep an eye on urban work trends and remote work adoption—both impact demand.

5. Mortgage REITs (mREITs)

Instead of owning properties, mREITs provide financing for them. They earn income from the interest on mortgage loans. These tend to be more sensitive to interest rate fluctuations, so they can be riskier and more volatile.

How to Evaluate a REIT

Before investing, consider:

• Management quality – Who’s running the REIT and what’s their track record?

• Dividend yield – What kind of return can you expect?

• Debt levels – REITs with heavy debt loads may be riskier in a downturn.

• Occupancy rates and tenant quality – Higher occupancy and strong tenants signal a healthy portfolio.

Pros and Cons of Investing in REITs

Pros:

• Passive income through dividends

• Diversification outside of the stock market

• Liquidity—many REITs trade on public exchanges

• No property management headaches

Cons:

• Sensitive to interest rate changes

• Limited growth during economic downturns

• Not all REITs are created equal—due diligence is key

The Bottom Line

REITs offer a flexible, low-barrier entry into real estate investing. Whether you’re saving for your next down payment, building wealth post-sale, or diversifying beyond your current property, REITs can be a powerful part of your financial strategy. Start small, stay informed, and let your money grow—brick by brick.