A major advantage of investing in real estate stocks is that you don’t have to have as much money to get started as you would directly buying the physical property.
A REIT, or real estate investment trust, is a company that owns, operates, or finances income-producing real estate. They can either be private or public, with the publicly traded REIT being the more popular of the two.
In exchange for receiving favorable tax treatment (they can avoid corporate taxation), REITs must distribute 90% of their profits in the form of dividends. The dividend revenue comes from rental income and capital gains.