A REIT, or Real Estate Investment Trust, is a company that owns income-producing real estate like apartments, office buildings, shopping centers, or warehouses. When you buy shares in a REIT, you own a piece of these properties without having to buy actual real estate yourself. REITs must distribute most of their profits to shareholders as dividends.
You buy shares of a REIT that owns 50 apartment buildings across the country. As tenants pay rent, the REIT collects that money and distributes much of it to you as a dividend. You benefit from real estate income without needing to manage properties or come up with a large down payment.
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