You need good investment capital to dabble in REITs or Real Estate Investment Trusts. If you want to avoid the bother of traditional transactions in the industry, choose this option which is really a long-term investment with high returns, as REIT's are in principle, stocks. How does it work? A REIT happens when a company uses investor funds to buy and operate a property for income purposes, which is bought and sold on the stock market. In order for a corporation to maintain its status as a REIT, 90% of its profits coming under the tax, must be paid as dividends, thus they are exempt from paying regular corporate tax.