REIT Calculator

Calculate your potential returns from REIT investments. Factor in dividend yields, dividend reinvestment (DRIP), price appreciation, and ongoing contributions to project portfolio growth and income.

Portfolio Value = (Initial + Monthly Contributions) * (1 + Dividend Yield + Price Appreciation)^Years. With DRIP: dividends reinvested annually. Total Return = Final Value - Total Contributions
$10,000 initial + $500/month at 4.5% dividend yield with 3% appreciation for 10 years (DRIP enabled): Final portfolio = $102,847, Total dividends = $18,234, Annualized return = 11.8%

What is a REIT and how does it work?

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate. REITs must distribute at least 90% of taxable income as dividends to shareholders. They offer exposure to real estate without direct property ownership, providing liquidity and diversification. Trade on stock exchanges like regular stocks.

What are typical REIT dividend yields?

REIT dividend yields typically range from 3% to 6%, higher than most stocks. Equity REITs (own properties) average 3-4%, mortgage REITs average 8-12% but with higher volatility. Yields vary by property type: data centers (2-3%), healthcare (4-5%), retail (4-6%). High yields may signal risk or unsustainable distributions.

How are REIT dividends taxed?

REIT dividends are typically taxed as ordinary income (10-37% tax brackets), not the lower qualified dividend rate (0-20%). This is because REITs don't pay corporate tax. However, you may qualify for a 20% pass-through deduction under QBI rules. Hold REITs in tax-advantaged accounts (IRA, 401k) when possible to defer taxes.

What types of REITs are available?

Major REIT categories: Equity REITs (own properties: residential, office, retail, industrial, healthcare, data centers), Mortgage REITs (finance real estate debt), Hybrid REITs (both). Sector-specific: residential apartments, shopping centers, office buildings, warehouses, cell towers, data centers, healthcare facilities, hotels, self-storage.

Are REITs good for passive income?

Yes, REITs are excellent for passive income due to mandatory 90% dividend distribution, typically paid quarterly. They provide: regular cash flow, professional management, diversification across properties, liquidity (can sell anytime), lower minimum investment than direct real estate. Consider REIT ETFs for broader diversification across multiple REITs.

What are the risks of investing in REITs?

Key risks: interest rate sensitivity (prices fall when rates rise), economic downturns affecting property values and occupancy, sector-specific risks (e.g., retail disruption), dividend cuts during hard times, leverage risk (many REITs use debt), market volatility, higher tax rates on dividends. Diversify across REIT types and combine with other investments.