Ultimate Guide to Real Estate REIT Investing

Last Updated: April 2024

Real Estate Investment Trusts (REITs) present a unique confluence of real estate and stock market investment, providing opportunities that cater to a variety of investors. Serving as a bridge, REITs provide the ability to invest in the real estate sector without the complexities of direct property ownership. With their mandate to distribute a significant portion of their income as dividends, they offer a blend of income and capital appreciation potential.

13 Main Types of REIT Stocks

REITs (Real Estate Investment Trusts) are organized into different sectors based on the type of properties they own, manage, or finance. Here’s a breakdown of the main sectors of REIT stocks:

  1. Residential REITs: These REITs own and operate multi-family rental apartment buildings and manufactured housing.
  2. Retail REITs: This sector includes REITs that own and manage shopping malls, strip centers, and standalone retail establishments.
  3. Office REITs: These REITs own and manage office buildings and lease the space to a variety of tenants, ranging from startups to large corporations.
  4. Industrial REITs: Industrial REITs focus on properties like warehouses and distribution centers. These have gained prominence with the rise of e-commerce and the need for vast logistic networks.
  5. Healthcare REITs: This sector specializes in properties such as hospitals, senior housing, medical office buildings, and nursing facilities.
  6. Diversified REITs: These REITs hold a mix of property types in their portfolio, diversifying across multiple sectors of the real estate market.
  7. Lodging/Resort REITs: These own and manage hotels and resorts. They often operate in a somewhat cyclical manner, influenced by economic factors affecting travel and tourism.
  8. Self-Storage REITs: Focused on self-storage facilities, these REITs have seen growth with increasing urbanization and the need for storage solutions for residents with limited space.
  9. Data Center REITs: With the surge in digital data and cloud services, these REITs, which focus on facilities that house servers and other data storage systems, have gained importance.
  10. Infrastructure REITs: These REITs invest in the infrastructure of the real estate market, which includes cell towers, fiber cables, and energy pipelines.
  11. Timberland REITs: These REITs are involved in forests and timber-producing land. They earn revenue through the sale of timber.
  12. Specialty REITs: A more niche category, specialty REITs invest in unique properties not covered by other sectors. Examples might include movie theaters or educational facilities.
  13. Mortgage REITs (mREITs):Though not a property sector per se, mREITs are worth mentioning. They don’t own real estate but instead invest in mortgages or mortgage-backed securities, earning income from interest.

Top 20 REIT Stocks

The universe of REIT stocks is diverse, mirroring the vast expanse of the real estate sector itself. From retail spaces to data centers, and from residential complexes to healthcare facilities, REITs cover almost every conceivable real estate segment. This section provides an exhaustive list of REIT stocks, helping you navigate through the options and understand the niche each REIT operates within.

Have a suggestion for this list? Contact Us for consideration.

Internally vs Externally Managed REITs

Internally and externally managed REITs differ primarily in their management structures and fee arrangements. Below is a comparison of the primary differences between the 2 types of REITs:

Internally Managed REITsExternally Managed REITs
Management is part of the company’s employees.Management is contracted through an external firm.
Potential for aligned interests with shareholders.Fees may not align with shareholders’ interests.
Typically lower operational costs.Often charges management and performance fees.

100+ List of Top Rental Real Estate Stocks

What is REIT Investing?

REIT Stock Investing

REIT investing involves purchasing shares of publicly traded companies that own or finance income-producing real estate. This form of investment offers individuals the opportunity to earn dividends from real estate ventures without having to buy, manage, or finance properties directly.

REIT Stock Investing FAQ

How do REIT Dividends Work?

By law, REITs are required to distribute at least 90% of their taxable income to shareholders annually in the form of dividends. This structure often results in higher dividend yields for REIT stocks compared to other types of real estate stocks, making them attractive for income-seeking investors.

Are REITs More Volatile Than Other Types of Real Estate Stocks?

REITs can be influenced by factors specific to both the real estate market (like property demand or interest rates) and the broader stock market, potentially leading to volatility. However, their correlation to overall market movements might vary, allowing them to serve as a diversification tool in a portfolio. A thorough understanding of rental real estate finance is highly recommended to understand the risks and rewards of REIT investing.

More Types of Real Estate Stock Investing Guides

Disclaimer: The information provided on this website does not, and is not intended to, constitute financial advice. As such, all information, content, and materials available on this site are for general informational purposes only. Please review our Editorial Standards for more info.