Real Estate Investment Trusts (REITs): How Much Can You Earn?

Introduction

Investing in real estate can be highly rewarding, but it often requires significant capital and management effort. That’s where best reit – Real Estate Investment Trusts – step in. These investment vehicles offer you the chance to earn rental-like income and property appreciation without owning physical property. In this article, you’ll learn how much you can earn, discover top-performing reit index and reit etf options, and get practical tips for building a real estate portfolio that produces consistent returns.

What Is a REIT?

Real estate fund or real estate funds investment vehicles structured to own, operate, or finance income-producing properties. They come in major categories like:

• Equity reits, which own and manage real estate assets
• Mortgage REITs (mREITs), which invest in real estate debt
• Hybrid REITs, combining both approaches

REITs must distribute at least 90% of taxable income as dividends, offering investors regular payout streams – often higher than typical stock dividends. Moreover, they allow ownership of commercial properties without the hassle of landlord duties.

Why Invest in REITs?

1. Passive income through steady dividends
2. High dividend reits often yield 4–7%, far above bond or bank returns
3. Low barrier to entry – you can start with a few hundred dollars
4. Liquidity similar to stocks, unlike direct how to buy investment property

However, there are reasons why not to invest in reits:

• Sensitive to interest rates
• Dividends taxed as regular income
• Less capital appreciation than growth stocks

How Much Can You Earn?

Expected annual returns from equity REITs typically range between 8–12%, combining dividends and share price growth.

Dividend Examples (mid-2025 data):

REIT	Type	Approx. Yield
Prologis (PLD)	Industrial	3.3%
American Tower (AMT)	Cell tower	3.15%
Realty Income (O)	Net lease	5.6%
Iron Mountain (IRM)	Specialty	3.4%

Add 4–8% in capital appreciation to reach total returns in the 8–12% range, making best reit investments competitive with other income-producing assets.

Best REITs & Sectors to Watch

Top-performing names include:

• Prologis, American Tower, Equinix, Welltower, Digital Realty – often cited as the five largest largest reits Wikipediahoyacapital.com
• Iron Mountain had a 57% one-year return – led best performing reits in mid-2025 InvestmentNewsYCharts
• NetSTREIT (NTST) yielded ~4.8% with 99.9% occupancy Investor

Sector strategies:

• Industrial and logistics (e.g., Prologis): rise with e-commerce
• Data centers & cell towers (Equinix, American Tower): 5G growth
• Specialty (Iron Mountain, healthcare facilities): niche exposure
• Net lease (Realty Income): stable corporate tenants

REIT Funds & ETFs

Diversify across hundreds of properties using:

• Vanguard Real Estate ETF (VNQ) – ~3.5% yield, 150+ holdings
• iShares U.S. Real Estate ETF (IYR) – 16.3% performance over 12 months
• Schwab US REIT ETF (SCHH) – focused purely on REITs
• Real Estate Select SPDR (XLRE) – holds 31 S&P REITs, 18.1% returns

Best reit funds may combine diversification with reliable earnings.

Building a Real Estate Portfolio: REITs vs. Direct Rental Properties

REITs:

• Passive management
• High liquidity
• Modest upfront cost

Direct rental property:

• Higher yield potential (10–15%)
• Greater control
  Requires down payment, management, repairs

For investing in rental property for beginners, direct ownership can be rewarding, but REITs remain a strong, low-effort alternative – ideal for most retail investors.

How to Invest in a REIT?

1. Choose platform: brokerage, retirement account, or platforms offering invest with roots reviews
2. Pick REITs or ETFs that align with your goals: yield, growth, sector
3. Evaluate metrics: dividend yield, occupancy, debt levels, fees
4. Buy and monitor: REITs are market-traded; adjust as needed

REIT Indices & Benchmarking

• FTSE Nareit All Equity REITs index: broad market tracker
• Compare your picks to index performance (typically 8–10% annually).

Risks of Investing in REITs

• Interest rate hikes (increase costs, reduce yields)
• Market volatility
• Sector trends (e.g., online retail impacts malls)
• Taxation: dividends taxed as income – higher than long-term capital gains

FAQ

What is the best reit for steady income?

Realty Income (O) offers ~5.6% yield and monthly dividends – ideal for those seeking consistent payments. It has strong tenant diversification and a reliable payout record.

How to invest in a reit index fund?

Search for index-based ETFs like VNQ or SCHH, evaluate expense ratios (0.1–0.2%), and invest via your brokerage. These track thousands of REITs for instant diversification.

Are high dividend reits safe?

High yields can signal risk. Evaluate tenants, leverage, payout ratios, and coverage ratios before investing. Sometimes moderate-yield, stable REITs offer better risk-adjusted returns.

Should beginners buy reit etf or individual REITs?

ETFs may be safer for beginners: they reduce company-specific risk and offer balanced exposure across sectors. Over time, you might add individual REITs as you learn more.

How does a real estate fund differ from direct property?

Funds (mutual or REIT) pool investor capital to buy a variety of properties. You get passive income without managing tenants, but trade liquidity for potential upside control.

Where is the best place to invest in real estate via REITs?

Look for REITs in growing sectors – industrial (Prologis), data centers (Equinix), healthcare (Welltower) – that benefit from long-term trends like e-commerce and population aging.

What are top reits in 2025?

Leading names include Prologis (industrial), American Tower (cell towers), and Iron Mountain (specialty). These are backed by strong financials and market positioning hoyacapital.comInvestmentNewsYCharts.

Why might someone ask why not to invest in reits?

REITs can be rate-sensitive, tax-inefficient (dividends taxed as income), and underperform in sluggish property markets. Choose wisely and diversify.

How do mortgage REITs differ?

They focus on property-backed loans and debt instruments. While their yields (10–20%) are high, they carry more interest-rate risk and credit risk than equity REITs.

Can REITs beat traditional real estate returns?

Equity REITs typically return 8–12%, comparable to average rental property yields plus appreciation – without the headaches of landlord duties or large capital needs.

Additional References

Brown, Investopedia (2025). 10 Biggest REITs: An Overview
https://www.investopedia.com/articles/investing/041515/10-biggest-reits-overview.asp

Nareit (2025). List of REITs & Real Estate Funds
https://www.reit.com/investing/investing-reits/list-reit-funds

Morningstar (2025). Best REIT Stocks to Buy
https://www.morningstar.com/stocks/best-reits-buy

The Motley Fool (2025). Best REIT ETFs for 2025
https://www.fool.com/investing/how-to-invest/etfs/real-estate-etfs/

Investor.com (2025). NetSTREIT Income Update
NetSTREIT Investor Overview: https://investors.netstreit.com/overview/default.aspx

Q2 2025 Financial Results: https://investors.netstreit.com/press-releases/press-releases-details/2025/NETSTREIT-Reports-Second-Quarter-2025-Financial-and-Operating-Results/default.aspx