This Investment Lets You Own a Piece of Premium Real Estate for Less Than $100

Ever dreamed of owning prime real estate but thought it was out of reach? Real estate investment trusts (REITs) have transformed how everyday investors can profit from properties—not by knocking on doors to get days-late rent checks, but by buying stakes in property portfolios that contain everything from luxury shopping centers to premium office buildings.

As Harm Meijer, author of Real Estate Rules: The Investor’s Guide to Picking Winners and Avoiding Losers in Listed Property, explains, “With REITs, you click on the mouse and buy shares and that’s it.”

How REITs Make Real Estate Investing Accessible

For most investors, directly purchasing premium real estate is out of reach. As Meijer points out: “If you buy a property directly, you really have to know what you’re doing. You have to have local knowledge… it’s a lot of work.” REITs solve this by providing professional management and economies of scale.

REITs are also highly liquid and can be bought and sold quickly through regular brokerage accounts. Most trade for less than $100 per share, allowing you to start building your portfolio with a small initial investment.

Making Smart REIT Investment Choices

According to Meijer, successful REIT investing involves examining the properties in a REIT’s portfolio. “You have to start with having a deep look at the type of assets they have,” he said. “That sounds very obvious, but a lot of people don’t do that. And when the market turns, it certainly shows.”

Meijer suggests a three-step approach for evaluating REITs:

1. Examine the Properties

“Start by understanding the types of properties in their portfolio,” Meijer advised. This is easier than you might think: REITs provide detailed information about their properties on their websites, including photos and locations. Spend some time looking at the following:

• Where the properties are located
• What kind of properties they are (office buildings, shopping centers, apartments, etc.)
• The quality of the buildings and their neighborhoods
• Major tenants who rent these properties

You can even use Google Maps to visit these locations virtually. “In even half an hour, you’ll have a very good idea of what they’re like,” Meijer said.

2. Check the REIT’s Debt Levels

Just like a homeowner can be “house poor” with too much mortgage debt, REITs need to manage their borrowing carefully. Meijer suggests looking at a simple measure called “net debt to EBITDA” (which you can find in a REIT’s financial reports and on financial websites). “If it’s well below 10, then you’re generally good,” he said. The lower the number, the less the risk.

3) Research the Management Team

“You want management that has skin in the game,” says Meijer, meaning executives who own shares of their own REIT. This helps ensure they’re making decisions that benefit all shareholders. Good management teams should also:

• Have experience through different market cycles
• Have a clear strategy for growing the business
• Communicate regularly

One crucial warning Meijer gave: Don’t get seduced by high dividend yields: “Too many people just focus on the yield. They see 10% and think ‘I’m going to go in it.’ And it always ends up in a disaster,” he said. The yield is often high because the market sees significant risks ahead, he said.

The Easiest Way to Start Investing in REITs

You can buy REIT shares through any regular brokerage account—the same way you’d buy stocks. Most major brokers offer commission-free trading, and you can start with just one share. Popular brokers like Fidelity, Charles Schwab, and Vanguard all offer REIT trading.

The Bottom Line

REITs offer an accessible way to add real estate to your investment portfolio without taking on the complexities of direct property ownership. Finding the better REITs requires a bit of homework, but it’s less involved than fielding late-night calls about unclogging a tenant’s toilet.