Passive Income Resource Guide
REITs
165 articles9 sections
REIT basics
- What Are REITs and How Do They Work?Start here A REIT owns or finances income-producing real estate and must pay out at least 90% of its taxable income as dividends. The tests it must pass, how to own one, and taxes.
- REITs vs Direct Real Estate Ownership: Which Is Better? Listed REITs take the price of a share and no landlord work; a financed rental needs a down payment and reserves but adds borrowing and tax breaks. A $65,000 example.
- Types of REITs Explained: Equity, Mortgage, and Sector REITs Equity REITs own property, mortgage REITs hold real estate loans, and hybrids do both. How each property sector earns, how long its leases run, and its main risk.
Dividends and valuation
- FFO and AFFO Explained: Essential REIT Valuation Metrics FFO is a REIT's net income plus real estate depreciation, minus gains on property sales. AFFO also subtracts routine capital spending. How to figure and use both.
- REIT Dividend Yields: How They Work and What to Expect U.S. equity REITs yielded 3.93% at the end of September 2026 vs 1.03% for the S&P 500. Yields by sector, why REITs pay more, and signs a high yield may be cut.
Risks and downturns
- How REITs Perform During Recessions REITs rose in the 1990-91 and 2001 recessions but fell 45% in 2007-09 and 12% in 2020. Results by recession and sector, dividend cuts, and balance sheets that held up.
- REIT Risks Every Investor Should Understand REIT investors lose money when rates rise, debt comes due, a sector like office shrinks, mortgage REIT book values fall, or dividends are cut. How each risk works.
Buying REITs
- How to Invest in REITs: A Step-by-Step Guide Open a brokerage account or IRA, choose REIT shares, a REIT fund, or a non-traded REIT, place the order, and keep your 1099-DIV. What each route takes to start.
- International REITs: Investing in Global Real Estate Non-U.S. REITs add other property markets and currencies. A fund like VNQI (0.12% a year) is the simplest route; foreign tax withheld is creditable only outside an IRA.
- Publicly Traded vs Non-Traded REITs: Key Differences Listed REITs sell any trading day at market price. Non-traded REITs cost more, can limit or suspend buybacks, and set income or net worth minimums for buyers.
- Best REIT ETFs and Mutual Funds for Passive Investors Broad REIT index funds cost 0.07% to 0.13% a year. Compare SCHH, FSRNX, USRT, XLRE, VNQ, and VGSLX on fees, index, holdings, minimums, and 401(k) access.
Taxes and retirement
- REIT Investing in Retirement: Building a Dividend Income Stream Equity REITs yielded 3.93% in Sept. 2026. An IRA or Roth IRA avoids yearly tax on their dividends; RMDs start at 73 or 75, and dividends can be cut.
- REIT Tax Treatment: What Investors Need to Know Most REIT dividends are taxed as ordinary income, but 20% of the Section 199A part is deductible, and return of capital lowers your basis until it reaches zero.
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