Instead, investors purchase shares through a direct-to-consumer online portal such as Fundrise or Realty Mogul or through a financial advisor. Non-traded REITs don't trade on stock exchanges.

Usually you’ll need to purchase a REIT mutual fund through a broker. They also tend to have a higher minimum investment, typically around $2,500. A manager actively manages the mutual fund, aiming to buy shares of the REITs they believe will deliver superior performance relative to a benchmark index.īecause of that active management, REIT mutual funds often have a higher expense ratio than REIT ETFs. They hold a basket of REITs, enabling investors to gain broad exposure to the sector. REIT mutual funds are a lot like REIT ETFs. ETFs also charge investors a fee, known as the ETF expense ratio. However, like public REITs, they expose the holder to stock market volatility. ETFs are one of the most passive ways to invest in real estate. They trade on the stock market, making them highly liquid. REIT ETFs are relatively low cost since you only have to buy one share. They hold a broad basket of REITs, which reduces the risk of losing income if a single investment cuts its dividend due to deteriorating market conditions. REIT exchange-traded funds (ETFs)Ī great way for beginners to start generating passive income from real estate is through REIT ETFs. Finally, a poorly managed REIT can find itself in financial trouble during a recession, which would cause the REIT to reduce or even temporarily pause its dividend while it works through the issues. While there are many REIT options, it can be daunting for beginning investors to know which ones to buy. There are some downsides to publicly traded REITs, including exposure to stock market volatility. That provides investors with lots of passive income investment options. Many focus on specific property sectors, such as industrial, office, retail, or residential, or they focus on certain markets, such as the Sun Belt region or the West Coast. There are more than 200 publicly traded REITs. Public REITs are also highly liquid because you can buy and sell shares through a brokerage account any day the stock market is open. They’re passive investments because you don't need to do any work other than research and follow the investment. REITs are also a low-cost investment since shares of most REITs trade for less than $100 each. That makes them a great source of income.

REITs must distribute 90% of their taxable net income to shareholders via dividends to maintain their tax-advantaged status with the IRS. Real estate investment trusts (REITs) that trade publicly on stock market exchanges are traditionally the easiest and lowest-cost way to invest in real estate to collect passive income. Publicly traded real estate investment trusts (REITs) Here's a brief look at some of the many ways to make passive income from real estate: 1. Ten ways to make passive income from real estate

Create passive income