Using REITs to Teach Kids About Real Estate Without Buying Property

When most people think about real estate investing, they imagine buying houses, renting them out, or flipping properties. While those methods can build wealth, they require a lot of time, money, and management.

But what if there was a way for kids and teens to learn about real estate investing without having to buy a house?

That’s where REITs (Real Estate Investment Trusts) come in.

A REIT is a company that owns, operates, or finances real estate properties and allows investors to buy shares, just like stocks. Instead of buying and managing properties yourself, REITs let you invest in real estate passively while earning dividends and appreciation.

In this blog, we’ll explore:
✅ What REITs are and how they work
✅ Why REITs are a great way to teach kids about real estate
✅ How to introduce kids to REIT investing step by step
✅ How families can use REITs to start building wealth together

By the end, you’ll see why REITs are a perfect way to introduce kids to real estate investing—without the stress of buying or managing property.

What Are REITs and How Do They Work?

A Real Estate Investment Trust (REIT) is a company that owns and manages income-generating real estate like:
🏢 Office buildings
🏨 Hotels and resorts
🏬 Shopping malls and retail centers
🏠 Apartment complexes
🚚 Storage units and warehouses

Instead of buying an entire property, investors buy shares in the REIT, just like investing in a stock.

How REITs Make Money

REITs generate income by renting out properties and collecting rent. This money is then distributed to investors as dividends, which means:
💰 Investors earn passive income without managing property
📈 Shares in REITs can increase in value over time
🏡 Investors get the benefits of real estate without needing large amounts of money

Example:
If a REIT owns a shopping mall, it earns money from the stores paying rent. That rent is shared with investors as monthly or quarterly dividends.

For kids, this is an easy way to learn how rental income works—without needing to own an actual property!

Why REITs Are a Great Way to Teach Kids About Real Estate

1. REITs Teach Kids the Basics of Real Estate Investing

Instead of learning complicated property management, kids can understand real estate through stocks. They’ll learn how:
✅ Real estate generates income
✅ Properties appreciate over time
✅ Investors make money through dividends and growth

This is a low-risk way to introduce real estate investing without buying a house or dealing with tenants.

2. REITs Show the Power of Passive Income

With REITs, kids earn money just by holding shares, just like rental property owners earn money through tenants.

Example:

• A kid invests $50 in a REIT.

• The REIT pays $5 in dividends every year.

• Over time, their money grows without extra work.

This teaches kids that making money doesn’t always require a job—it can come from smart investments!

3. REITs Are Affordable for Kids & Teens

Unlike buying a rental property (which can cost hundreds of thousands of dollars), REITs allow kids to start investing with as little as $10.

Example:
Instead of saving $50,000 for a down payment, a kid can invest $50 in a REIT and start earning income immediately.

This makes real estate accessible to anyone, no matter their age or income level.

4. REITs Teach Kids About Diversification

Instead of buying one house, investing in a REIT means owning a piece of many properties. This helps kids learn about:
📈 Spreading risk across multiple investments
🏢 Investing in different types of real estate (offices, apartments, hotels, etc.)
💰 Building wealth without putting all their money in one place

Step-by-Step Guide to Teaching Kids About REITs

Step 1: Explain REITs with Simple Examples

Help kids understand REITs by comparing them to something familiar.

🛍 Example:
"A REIT is like buying shares in a shopping mall. Instead of owning the whole mall, you own a small piece, and when stores pay rent, you get a share of the money!"

Step 2: Show Kids How to Invest in REITs

Many investing apps allow kids and teens to buy REIT shares with as little as $10.

✅ Popular REITs:

• Vanguard Real Estate ETF (VNQ) – Invests in apartments, offices, and retail properties.

• Realty Income (O) – Pays monthly dividends like rental income.

• Prologis (PLD) – Owns warehouses and storage units.

🛠 Activity: Let kids pick a REIT and track its performance each month to see how much they earn in dividends.

Step 3: Show Kids the Power of Compounding

Explain how reinvesting dividends helps money grow faster.

🔹 Example:

• A kid invests $100 in a REIT that pays 5% dividends.

• Instead of spending the $5 dividend, they reinvest it.

• After 10 years, their money grows to $162 without adding extra money!

🛠 Activity: Use an online compound interest calculator to show how investments grow over time.

Step 4: Compare REITs to Owning a Rental Property

Help kids understand the differences between REITs and owning rental properties.

How Families Can Use REITs to Build Wealth Together

1. Open a Family Investment Account

Parents can open a custodial investment account where kids can start buying REITs.

🔹 Popular Apps for Kids & Teens:

• Fidelity Youth Account (For teens)

• Stockpile (Lets kids buy fractional shares of REITs)

• Greenlight + Invest (For parents to manage kids’ investments)

🛠 Activity: Help kids buy their first REIT share and track their earnings!

2. Use REIT Dividends to Save for a Future Rental Property

Families can reinvest REIT income to save up for a real house in the future.

💡 Example:
If a family invests $500/month into REITs for 5 years, they could have $35,000+ for a down payment on a rental property!

Conclusion: Give Your Kids a Head Start in Real Estate

Teaching kids about REITs is a simple, low-cost way to introduce them to real estate investing without needing to buy property.

By starting early, kids can:
✅ Learn how real estate makes money
✅ Earn passive income through dividends
✅ Build wealth long before they buy their first home

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