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Step 1
Familiarize yourself with real-estate investment trusts - companies that buy and usually manage apartment complexes, office buildings, shopping centers and warehouses, and sells shares to the public.
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Step 2
Research publicly traded REITs. About 200 REITs are traded on major stock exchanges, and you can learn about them by reading annual reports and other public documents.
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Step 3
Focus on REITs that are at least three years old.
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Step 4
Look for financial strength. A healthy REIT's debt usually will be less than 50 percent of its market capitalization (the number of all outstanding shares multiplied by the price per share).
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Step 5
Ensure the REIT's revenue comes largely from operations and not from the sale of properties or from borrowed funds.
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Step 6
Look for REITs that have shown steady growth in dividends over several years.
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Step 7
Ensure executives and managers of the REIT own a substantial amount of stock in the REIT.
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Step 8
Concentrate on REITs that have returned at least 12 percent annually to shareholders for the past few years. (Total returns are dividends plus appreciation in the stock price.)
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Step 9
Buy stocks through a discount brokerage. That will save you money on commissions.
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Step 10
Diversify. Different REITs focus on different aspects of the real-estate industry. Don't put all your eggs in one basket.
