A REIT (real estate investment trust) offers individuals a unique opportunity to invest in real estate without needing to buy or manage a property—and at a much lower cost.
Think of REIT investing like buying stock, but instead of investing in a company’s assets, you invest in real estate that drives passive income, like apartment buildings or shopping malls, or in mortgages and mortgage securities. Like investing in stocks, the average return on REITs can vary depending on your specific investments.
In this guide, we’ll look at some of the best-performing REITs and what kind of REIT returns you can expect with different investment opportunities.
REIT investing vs stock investing
Historical REIT returns
While the average return on REITs varies based on the type of REITs you choose to invest in, the REIT market usually delivers steady long-term returns. Even though REITs experienced major losses during the COVID-19 pandemic, recent growth has helped make up for those losses.
Data from: NAREIT1 December 2024 Fact Sheet
Historically, REITs have proven to be less volatile than stocks. However, just like stocks, various factors can influence your average REIT return. The economy’s ups and downs and the types of property in a REIT’s portfolio can greatly affect all investment opportunities within that specific sector. This is because they directly impact the market's demands and the overall economic outlook.
For individual REITs, factors such as management quality or the desirability of particular locations or properties can also influence the return on the REIT portfolio. One REIT vs. stocks difference you should know: all REITs also pay 90% of their taxable income as dividends, which can also increase your earnings from this investment. Only some stocks pay dividends.
The best-performing REITs of 2025
Similar to investing in stocks, finding the best-performing REITs can make all the difference in improving your average REIT return. With that in mind, here’s a closer look at how different REIT sectors have performed over the last year.
Data from: NAREIT2 December 2024 Fact Sheet
Types of REITs
There are several types of REITs to consider when beginning a real estate investment portfolio. Here are some of the most common options you should be aware of.
1. Equity REITs
The most common type of REIT is an equity REIT. Equity REITs are investment companies that build, purchase, renovate, manage and sell real estate properties that produce income, such as shopping centers, resorts, apartment complexes, healthcare facilities and so on. An equity REIT may focus on a specific sector or have a more diversified portfolio.
Equity REITs generate revenue by collecting rent from their tenants, which provides a stable and predictable source of income. Just like stocks, however, equity REITs can be vulnerable to recessions.
Here’s a closer look at some of the most popular types of Equity REITs:
- Retail REITs: Retail REITs focus on retail properties, such as shopping centers, regional malls and free-standing facilities. These can include everything from grocery stores to home improvement centers. Thanks to their strong historic returns, retail REITs are commonly included in a 401(k) or other retirement portfolios. Since they have multiple tenants, shopping centers anchored by a major store and regional malls tend to offer higher returns than free-standing stores.
- Residential REITs: Residential REITs own and manage residential rental properties such as apartments, condominiums, townhomes and single-family homes. Good property management can lead to significant returns by keeping properties fully occupied. Residential REIT returns can be especially strong during periods (and in locations) when housing demand outpaces supply.
- Office REITs: Office REITs own and manage office buildings, including skyscrapers, office parks and individual buildings. They tend to focus on areas that see high demand from commercial landlords, such as warehouses or buildings located in central business districts. The best-performing office REITs usually include newer, well-maintained offices that are more attractive to potential renters. However, the rise of working from home has led to declining occupancy rates3 in traditional office spaces.
- Healthcare REITs: Healthcare REITs own and operate a wide range of healthcare-related properties. These include hospitals, standalone medical offices, senior housing facilities, and similar properties. Since healthcare facilities are always needed, healthcare REITs have historically had a strong REIT rate of return.
2. Mortgage REITs
Mortgage REITs purchase and invest in mortgages and mortgage-backed securities. Their income comes from the interest paid on the mortgages they invest in. Mortgage REITs may invest in commercial or residential mortgages or both. The return on these REITs generally has little correlation with stocks and bonds and is instead influenced by interest rates and the real estate market.
3. Hybrid REITs
A hybrid REIT includes equity and mortgage investments. By using both types of REITs, a hybrid REIT is more diversified, which helps lower the potential risk to the average return on REITs if either equity or mortgage REITs experience a downturn. Dividend payouts from both sources of income are distributed to investors.
4. Public Non-Listed REITs
A public non-listed REIT is registered with the SEC but is not traded on a major securities exchange. Because of this, they have redemption restrictions. Instead of selling your shares normally, you might be limited to secondary marketplace transactions or share repurchase programs. Purchases are often made through a broker-dealer to diversify the portfolio rather than through a typical brokerage account.
State securities regulators still oversee REITs, which makes them more accessible to everyday investors. Aside from not being publicly traded and having redemption restrictions, public non-listed REITs are mostly the same as other public REITs.
5. Private REITs
Private REITs are not publicly traded and are exempt from SEC registration. They don’t have the same disclosure requirements as other REITs. To invest in a private REIT, you must be an accredited investor, meaning you have an annual income of at least $200,000 or a net worth of over $1 million. Strict holding requirements also limit your ability to sell – in some cases, a private REIT may not even have the option for investors to sell their stake.
Because of this, private REITs are only advisable if you are an accredited investor and if you’ve done careful research to understand whether a specific private REIT is actually a good investment option.
Investing in REITs
Wondering how to invest in REITs? Getting involved in real estate investing is easier than you might think — as long as you plan on investing in a public REIT.
To invest in an REIT, open a brokerage account through real estate investing sites such as Fundrise or RealtyMogul. You can then purchase shares in individual REIT stocks, ETFs, mutual funds or index funds. Similar to when you buy a stock, you should carefully research a REIT before investing.
Each platform has its own rules for minimum investments, the minimum length of investment, and management fees. Make sure you select an option that matches your investing goals and priorities.
Learn more about investment opportunities with Moneywise
As with stocks, there are several different sectors of REITs you can invest in, as well as multiple investment opportunities within each sector. Understanding the average return on REITs based on the type, location and diversity of the portfolio will help you maximize your potential earnings. Choose Moneywise for the latest news and insights on REITs and other investment options so you can make the most of your investing strategy.
REITs FAQs
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