When Ken Ozeki decided to invest in real estate, the media relations director knew that buying a house was not in the cards, since home prices where he lives in San Francisco average $1.3 million. Luckily, he had a more affordable plan B.

Ozeki funneled about $10,000 into real estate investment trusts (REITs), which are stock-like shares in companies that own property. Although buying a REIT may not come with the thrill of hosting a housewarming party, it offers an easy entry point into real estate investing—Ozeki recently bought a REIT share for 12 bucks.

“Purchasing real estate as an investment didn’t seem as accessible as gradually buying REITs,” Ozeki explains. He also finds REITs more sensible than pouncing on every stock craze: “While most retail investors are drawn to trending stocks like the meme stock craze, I feel having a portion of my portfolio in REITs is a good alternative to hard real estate.”

And it’s paid off: Over the past seven years, Ozeki’s REIT investments have doubled in value, providing “a sense of security in my diversified holdings that I’ve been confident in holding throughout the past few years of economic ups and downs.”

Ozeki is hardly the only investor hailing REITs as a rock in his portfolio. In today’s turbulent stock market, a growing number of investors have turned their attention to REITs, wondering: Might they provide a port in this storm?

“Wall Street’s jitters over Trump’s tariffs have investors eyeing REITs as a profitable alternative,” says Jeep Kline, professor of finance at UC Berkeley Haas School of Business and managing partner at Raisewell Ventures. “The shift toward REITs provides an option investors can place more confidence in when everything else feels like a coin toss.”

REIT renaissance

Congress created REITs back in 1960 to offer all Americans the opportunity to invest in real estate. Today, about half of US households have REITS in their brokerage accounts or retirement plans. Unlike stocks, REITs are legally required to distribute at least 90% of their taxable income to shareholders—which may limit their growth but provides a steady income stream that can serve as a buffer during rocky periods on Wall Street.

Although REITs have a reputation of being the boring-but-reliable cousin to melodramatic stocks, they aren’t immune to what’s going on in the world. As with equities, REIT values plunged after global-spanning tariffs were announced on April 2, then bounced back once a three-month pause on levies was declared on April 9. Here’s how returns on REITs in different sectors have fared since “Liberation Day” (see the full list here):

• Data centers: +7.1%
• Telecommunications: +3.8%
• Retail: -3.1%
• Residential: -3.7%
• Office: -6.9%
• Timberland: -11.7%

Overall, REITs have made a stronger recovery than stocks, at least through the end of April.

“Year to date, REITs have outperformed the S&P 500 by 5.6%,” says Edward Pierzak, SVP of research at the National Association of Real Estate Investment Trusts (Nareit). “As of April 30, total returns for the FTSE Nareit All Equity Index were up by 0.7%, while the S&P 500 was down 4.9%. This outperformance is underpinned by REITs’ strong balance sheets and solid operational performance, which should be resilient to a slower growth environment.”

Plus, REITs are a bargain, with prices near their lowest valuations since 2009.

“It is not uncommon to find even high-quality REITs trading at 30, 40, or even 50% discounts relative to the value of the real estate they own, net of debt,” according to Jussi Askola, president of boutique REIT investment firm Leonberg Capital. “After a long bear market, REITs are getting ready to recover … we think that they are offering a once-in-a-decade opportunity to win big.”

But not everyone agrees that REITs are the deal of the decade.

“REITs have outperformed the S&P 500 so far in 2025, but that outperformance came before the trade war heated up,” points out Matt Frankel, CFP, contributing real estate analyst at The Motley Fool.

“REITs are slightly underperforming stocks over the past month or so. This is likely due to interest rate uncertainty. REITs generally do best in a falling-rate environment, and with the Fed expecting tariffs to cause at least some inflation, the path of interest rates for 2025 has become more uncertain. If we get more clarity around the future direction of the Fed’s interest rate moves, REITs could certainly become more of a safe haven for investors.”

How to invest in REITs

If you’re interested in REITs, keep in mind that they function best as part of a diversified portfolio (Nareit recommends an allocation of 5%–15%) and that, in today’s economic climate, certain REITs are better positioned to flourish than others.

“REITs focused on multifamily [dwellings] are seeing the most demand,” says Jeff Holzmann, COO of RREAF Holdings. “That’s because the current market conditions and uncertainties about trade, tariffs, and regulation impact them the least or not at all. Residents still need to pay rent, owners don’t have to import any goods or services, and if the sponsor secured a reasonable loan rate, then even Fed decisions have minimal impact on the ability to service the debt and continue distributions to investors.”

“The REITs that are best positioned to produce low-volatility cash flow no matter what the economy does are outperforming,” says Frankel. “For example, net-lease REITs, which use a long-term lease structure and whose tenants cover variable expenses like taxes and insurance, are significantly outperforming. Realty Income and Vici Properties are good examples. Data center REITs like Digital Realty Trust and Equinix are outperforming, as strong demand for AI infrastructure is overpowering any economic uncertainty, at least for the time being.”

“Healthcare buildings housing doctors’ offices and senior facilities are holding their own,” adds Kline. “The real pain is concentrated in shopping malls and downtown office towers, where vacancy signs tell the story.”

One easy way to size up a REIT is to calculate its yield by dividing its annual dividends by its share price. This is what convinced Ozeki to purchase a mortgage servicing REIT, Two Harbors Investment. “At around $12 a share, the dividend payout has been 45 cents a share,” he says. “This felt like a low-risk holding to weather the current storm.”

Until the clouds surrounding the economy clear up, Ozeki is content knowing that even though he doesn’t own “hard” real estate, his REITs are providing a similar sense of stability. “Maybe if my REIT portfolio and other investments rise to the point where I can buy [a house] in whole, I’d consider it.”

The Fed held rates steady. At the end of the Federal Open Market Committee meeting yesterday, Fed Reserve Chairman Jerome Powell announced that they’d keep benchmark borrowing rates at a range of 4.25%–4.5%, where they’ve been since January. Markets are currently anticipating just over a 50% chance of a rate cut in July, which should help lower mortgage rates.

Rents have been rising. Homebuyers aren’t the only ones struggling with high prices. Rentec Direct’s State of Rent Report found that average rents climbed 31% nationwide over the past five years, or double that in some states. Arizona saw an 84% increase to $1,641. However, Hawaii’s rent is steepest at $2,132. Rents are predicted to continue increasing in 2025, but at a slower pace.

Apartment building permits dropped below pre-pandemic levels. A Redfin report has found that developers obtained permits to build 12.4 multifamily housing units for every 10,000 people in the US over the past year—a 27.1% drop from the pandemic building boom and a 5.5% drop since before the pandemic.

The best day to sell has arrived. ATTOM data on 47.9 million homes over the last decade has determined that May is the best month to sell a house, when sellers will snag a 9.5% premium. The very best day is May 27, when sellers enjoy a 14% higher sales price than usual.

NYC offices are filling up fast. In April, 3.38 million square feet of Manhattan office space was leased, up 23% from this time last year. Amazon made the most significant moves expanding its territory, leasing 330,000 square feet at 10 Bryant Park and buying 600,000 square feet at 522 Fifth Avenue.

Looking for regional housing market analysis? ResiClub’s newsletter delivers expert housing data, insights, and sharp analysis on everything from local home prices to inventory trends—so you can make smarter moves. Sign up free.

Retired grandmother (and Playbook reader) Dona Ashby runs a family flipping business with her daughter, buying foreclosures in Indiana and selling them for big profits. But she made one recent purchase without getting a look inside the house. How bad could it be? Find out below.

How’d you end up flipping foreclosures with your daughter? “My daughter Randi is my Realtor. It’s a great system because she charges me 1% commission, and it’s an activity we share that strengthens our mother/daughter bond.”

How’d you end up with this nightmare foreclosure? “In December 2023, I purchased a house in Newburgh, IN, for $136,000. Since the house had not been abandoned, I couldn’t go inside the house to check it out before purchasing it. So I had to buy it sight unseen, and was it scary!”

How was it inside? “The people still lived there amidst the worst cockroach infestation I’ve ever encountered. They were so bad, you could actually smell the roach poop. When you entered, they dropped onto you from the ceiling. Randi has a big problem with insects, so the first time one got in her hair, she ran screaming from the house. There were actually cockroaches between the wallpaper and the wall. The tenants had moved out by the sale, but three dumpsters worth of stuff were left.”

Did you eventually sell the house? “Randi closed on the home in September 2024 for $234,900. We cleared $42,500 after expenses. But I hope to never buy another one without getting inside to look. Sometimes, doing this, you’ll get a stinker, and this one was mine.”

What lessons have you learned flipping foreclosures? “One of my first lessons was on bidding at the sale. You’re in a room with seasoned investors. And here I am, a grandmother just playing around. When the property comes up, the bank bids first—that’s the judgment amount. If you’ve done your homework, determining the market value after renovations and how much the reno is going to cost you, you can confidently bid how much you’re willing to pay for it. At my first sale, I had investigated a property and knew I wanted to buy it. But one of the other investors outbid me, and he got it because I wasn’t sure exactly what it would cost to fix it up. Now I’m much more confident in my ability to buy, fix, and sell a home.”

This isn’t everything Dona saw. Check out her full adventure and before-and-after photos here.

Although this term conjures up Walking Dead vibes, the reality is a bit less dramatic but still pretty grim.

“Zombie homes are stuck in foreclosure limbo,” explains Christopher Naghibi, chief operating officer at First Foundation Bank. “Generally speaking, the owner ‘ghosts’ the property after getting a foreclosure notice, assuming the bank will finish the job of taking the property back. Spoiler alert: Sometimes the bank doesn’t.” When the cost to revive and sell the property exceeds its value, a bank may just take a tax write-off and leave the title in the name of the homeowner. Since said homeowner has bailed, in move the rats and raccoons.

Around 7,000 zombie houses are lurking nationwide, and although the number is dwindling, even one in your neighborhood is enough to keep you up at night, since they can drag down property values in the area. Zombie office buildings have also reared their heads as post-pandemic work-from-home policies drain the life out of downtowns.

But for real estate investors, zombie properties can spell an opportunity. “If you’ve got the stomach for some legal wrangling and a little bit of mold, you can pick up these properties at serious discounts, rehab them and turn a profit,” says Naghibi.

To find these properties, you can try contacting local utilities departments to ask about homes where electricity and water have been turned off. Certain states have also set up abandoned property databases.

“But before you become the hero who rescues a neighborhood eyesore, just know that I am a banker, attorney, and a licensed contractor, and I will not touch one of these things,” warns Naghibi. “The rewards typically don’t outweigh the risk. These deals require heavy due diligence, thick skin, and, most of the time, a hazmat suit.”