Owning a single rental property is great. But what if you could get most of the advantages of real estate investing by simply choosing the best real estate stocks for your portfolio? Real estate stocks are stocks related to the real estate market -- they might be real estate investment trusts (REITs), homebuilders, or real estate companies, but they are all in the industry.
There are many advantages to owning real estate stocks over real property, especially when it comes to eliminating the hassle of hands-on management. But there are a lot of real estate stocks to choose from, too. So, how can you even begin to pick among them?
Six best real estate stocks in 2025
Here are some real estate stocks to watch for the long term:
| Company name | Company ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|---|
| Mid-America Apartment Communities | NYSE:MAA | $15.0 billion | 4.73% | Residential REITs |
| UMH Properties | NYSE:UMH | $1.2 billion | 6.05% | Residential REITs |
| Lennar | NYSE:LEN | $31.6 billion | 1.62% | Household Durables |
| LGI Homes | NASDAQ:LGIH | $940.9 million | 0.00% | Household Durables |
| Equity Residential | NYSE:EQR | $22.7 billion | 4.63% | Residential REITs |
| CoStar Group | NASDAQ:CSGP | $29.2 billion | 0.00% | Real Estate Management and Development |
1. Mid-America Apartment Communities
NYSE: MAA
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NYSE: UMH
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3. Lennar
NYSE: LEN
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4. LGI Homes
NASDAQ: LGIH
Key Data Points
NYSE: EQR
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Equity Residential REIT (EQR -1.44%) is an apartment REIT that's not only committed to providing quality apartment living to residents in major urban areas but also has shown a strong commitment to sustainability. The company recently became the first residential REIT to be included in the Dow Jones Sustainability World and North America Indices.
Equity Residential was able to produce significant gains in normalized funds from operations (FFO) per share in 2024 of $3.89 versus $3.78 in 2023. Its more than 84,000 units averaged $3,056 per month rental rate in 2024, and the company held $20.8 billion in assets and only $9.2 billion in liabilities at the end of fiscal year 2024. Despite stiff competition in some of the most difficult real estate rental markets in the country, Equity Residential managed to achieve an occupancy rate of 96.2% in 2024.
6. CoStar Group
NASDAQ: CSGP
Key Data Points
Unlike the other real estate companies included in this list, CoStar Group (CSGP -1.19%) doesn't actually deal in real estate. What it sells is information on the commercial real estate market. Using advanced data analytics, it's managed to dig itself a deep moat, delivering 57 consecutive quarters of double-digit revenue growth as of the second quarter of 2025. It owns familiar brands like Apartments.com and LoopNet.
Net income dropped significantly in fiscal year 2024, from $374.7 million in 2023 to $138.7 million in 2024, but this may be due to the slowing real estate market and the increase in the cost of almost everything. Despite these hurdles, at the end of 2024, CoStar had increased its assets to $9.256 billion from $8.9 billion in 2023, while maintaining liabilities totaling only about $1.7 billion.
Pros and cons of investing in real estate stocks
Owning real estate stocks comes with benefits and drawbacks, like any stock. But when it comes to real estate stocks, the biggest benefits are that you're owning managed properties or companies that deal in the real estate industry, as opposed to owning and operating these companies yourself. It can seem like a great way to earn passive income to buy some rentals, for example, but it's actually a great deal of work, and buying some solid REITs instead will free your time up.
On the other hand, owning real estate stocks also leaves you at the mercy of the management team of the companies you're invested in. So, you really have to know and trust those people to perform well. Owning real estate stocks versus other types of stocks also exposes you to the cyclic nature of real estate, so you have to be prepared for ups and downs.
Criteria to choose real estate stocks
It's important to carefully choose your real estate stocks, since there are so many available and they can't all be winners. Different types of real estate stocks will have different metrics to examine, but for all of them, it's important to first understand the business they're in, be it a REIT, a homebuilder, a real estate company, or something else, so you can really think about the criteria that matter the most to you.
For example, with a REIT, it's important to look at how much debt the company has compared to its assets and income. REITs will have debt, especially if they're in a building phase, but more than about a 40% debt-to-asset ratio is where things may get dicey. If the market were to dry up, they would need to be able to still pay their bills. You can judge how their income looks by examining funds from operations (FFO) -- in fact, REITs are often evaluated by a metric called FFO Per Share.
Other companies, like home builders, may have a lot of inventory that you should carefully examine. If a home builder has more homes than they can sell, this could be a sign that deep discounting is coming and losses may follow.
Real estate companies largely operate on commissions, so it's important to know the number of agents in the company, their income streams, and the reliability of their income streams. For example, if a real estate company primarily works with residential clients, the number of new listings it can produce and close consistently will figure into its overall performance; one that simply does property management only needs steady, long-term clients.
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The bottom line
There are plenty of ways to invest in real estate besides owning physical real estate assets. For many investors, real estate stocks can make all the best parts of owning real estate much more accessible and far less expensive. Whether you're interested in investing in apartment REITs or the builders who construct owner-occupied neighborhoods, there are lots of offerings on the table.
When evaluating real estate stocks, remember that many of the same rules apply as they would for any kind of stock. Look for companies with great offerings, whether it's leasable real estate or purchasable housing stock.
Make sure they aren't carrying a high level of debt that could become a serious liability in a downturn. The better they are at managing their money, the better off you'll be. And, if the management team happens to own a big chunk of the company, that's pretty solid evidence they're invested in making their company succeed by tying their own futures to that success.
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