How to Invest in REITs in 2026: Public, Private, and Non-Traded Options

Learning how to invest in REITs starts with one decision: do you want liquidity, higher returns, or tax advantages? Public REITs trade on stock exchanges and you can buy them today through any brokerage. Private and non-traded REITs offer potentially higher yields but lock up your money for years. Each type serves a different portfolio role.

What Is a REIT?

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate. Congress created the REIT structure in 1960 to give everyday investors access to commercial real estate — an asset class previously reserved for the wealthy.

REITs must distribute at least 90% of taxable income as dividends. This requirement makes them popular with income-focused investors. In exchange, REITs pay little to no corporate income tax.

The REIT market covers nearly every property type: apartments, office buildings, warehouses, data centers, cell towers, hospitals, and timberland. The total U.S. REIT market exceeds $1.3 trillion in equity market capitalization.

Three Ways to Invest in REITs

Public Traded REITs

Public REITs trade on the NYSE or NASDAQ like any stock. You buy shares through a standard brokerage account — Fidelity, Schwab, Vanguard, or any other. Minimum investment: the price of one share, often $15–$150.

The biggest advantage is liquidity. You can sell any trading day. The biggest disadvantage is volatility. Public REITs fell 25% in 2022 even though the underlying properties held steady. Their prices correlate with the broader stock market in the short term, which undercuts the diversification benefit many investors seek.

Popular public REIT ETFs include VNQ (Vanguard Real Estate ETF) and SCHH (Schwab U.S. REIT ETF), both charging expense ratios under 0.12%.

Non-Traded REITs

Non-traded REITs register with the SEC but don't trade on an exchange. They raise capital through broker-dealers and financial advisors. Minimum investments typically range from $2,500 to $25,000.

Because they don't trade publicly, non-traded REITs report a stable net asset value (NAV). This smooths out the volatility you see in public REITs — but it also masks real price movements. You get quarterly redemption windows at best, and many funds limit total redemptions to 5% of NAV per quarter.

Platforms like Fundrise and Streitwise have modernized the non-traded REIT model with lower minimums ($10–$5,000) and more transparent fee structures. DiversyFund takes a similar approach with a growth-focused REIT strategy.

Private REITs

Private REITs don't register with the SEC under Regulation D exemptions. They're available only to accredited investors (those earning $200,000+ annually or holding $1M+ in net assets excluding their home). Minimums run $25,000 to $250,000.

Private REITs offer the least liquidity and the least regulatory oversight. In return, they can pursue more concentrated strategies — a single apartment complex, a portfolio of medical office buildings — that may generate higher risk-adjusted returns. Due diligence matters more here than anywhere else. For guidance, read our article on REIT investing explained.

How to Evaluate a REIT Before Investing

Funds from Operations (FFO): REITs use FFO instead of earnings per share. FFO adds depreciation back to net income because real estate depreciation is a non-cash charge that rarely reflects actual property value decline. A REIT trading at 12x FFO is generally cheaper than one at 18x FFO, all else equal.

Debt-to-EBITDA Ratio: REITs use leverage. A ratio under 6x is conservative. Above 8x signals risk, especially in rising rate environments. Check this number before anything else.

Occupancy Rates: A 95% occupancy rate is healthy for most property types. Below 90%, ask why. The answer might be a temporary lease-up period — or a structural problem.

Dividend Payout Ratio: Divide dividends by FFO. A ratio above 90% leaves little room for error. The best-run REITs pay out 65–80% of FFO and reinvest the rest.

How to Invest in REITs: Step by Step

1. Decide your investor status. Non-accredited investors can access public REITs and select non-traded REITs on platforms like Fundrise. Accredited investors unlock private REITs and institutional-grade offerings.

2. Choose your property sector. Industrial and data center REITs have outperformed over the past decade. Retail and office REITs have lagged. Pick sectors with structural tailwinds, not just high current yields.

3. Select your vehicle. Want daily liquidity? Buy a public REIT ETF. Want lower volatility and higher yields? Consider a non-traded REIT through Streitwise or DiversyFund. Want maximum control? Go private.

4. Open the right account. Public REITs work in any brokerage account. Non-traded and private REITs require accounts on their specific platforms. Most platforms accept IRA investments, which can shelter REIT dividends from ordinary income tax.

5. Fund and invest. Start small. Even a 5–10% real estate allocation can meaningfully diversify a stock-and-bond portfolio. Increase over time as you learn what you own.

Tax Considerations for REIT Investors

REIT dividends get taxed as ordinary income, not at the lower qualified dividend rate. For high-income investors, this means a federal rate of up to 37%. The Section 199A deduction lets you deduct 20% of REIT dividends, effectively capping the rate at 29.6% — but this provision currently expires after 2025 unless Congress extends it.

Holding REITs inside a Roth IRA eliminates the tax drag entirely. If you plan to own REITs for decades, a Roth IRA is the most efficient wrapper available. For a deeper look at the different structures, see our guide to types of REITs.

How REITs Fit Into a Broader Portfolio

The standard institutional recommendation is 5–15% of a portfolio in real estate. REITs provide that exposure without the hassle of owning physical property — no tenants, no maintenance calls, no property management headaches.

Combine public REITs (for liquidity) with non-traded REITs (for yield and lower correlation) for a blended approach. This gives you some money you can access quickly and some money working harder in less liquid strategies.

Frequently Asked Questions

How much money do I need to start investing in REITs?

You can start with as little as $10 on platforms like Fundrise for non-traded REITs, or the price of a single share ($15–$150) for public REIT ETFs. Private REITs require $25,000 or more and accredited investor status. Most investors start with public REITs and graduate to non-traded options.

Are REITs a good investment in 2026?

REITs offer attractive yields in 2026 as property values have stabilized after the 2022–2023 rate shock. Industrial, data center, and healthcare REITs have strong fundamentals. Office REITs remain challenged by remote work trends. Focus on sectors with growing tenant demand rather than chasing the highest dividend yield.

What is the difference between a REIT and real estate crowdfunding?

REITs are pooled investment vehicles regulated under specific tax code provisions. Real estate crowdfunding platforms let you invest in individual properties or portfolios, often structured as LLCs rather than REITs. Crowdfunding offers more deal-level transparency but less liquidity. Many platforms like Fundrise use REIT structures within their crowdfunding model.

Do REITs pay monthly dividends?

Some public REITs pay monthly (Realty Income is the best-known example), but most pay quarterly. Non-traded REITs typically distribute quarterly or reinvest dividends automatically. Check the distribution schedule before investing if regular income matters to your financial plan.

Can I invest in REITs through my IRA?

Yes. Public REITs work in any IRA. Most non-traded REIT platforms also accept IRA investments through custodial partnerships. Holding REITs in a Roth IRA is especially tax-efficient because REIT dividends are taxed as ordinary income — a Roth eliminates that tax entirely on qualified withdrawals.

What are the biggest risks of REIT investing?

Interest rate sensitivity tops the list — rising rates increase borrowing costs and make REIT yields less competitive versus bonds. Sector concentration risk matters too; an office REIT suffers if tenants don't renew leases. For non-traded and private REITs, illiquidity risk means you may not access your capital when you need it.

ModernAlts is an independent research platform. Nothing in this article constitutes investment, legal, or tax advice. Alternative investments involve risk including possible loss of principal.