REITs (Real Estate Investment Trusts), although not very well known, are a sensible way to invest in real estate without having to purchase your own property. A REIT is essentially a publicly traded company in the US or Canada that invests in real estate property. They come in all sizes and types, and some focus on certain regions while others are more diversified. Some REITs invest in commercial property, while others focus on residential real estate. There are even REITs that focus on university housing.
Overall, I think REITs are a good investment choice for 2 reasons:
By law, REITs are required to distribute most of its taxable income (90% or more) to its shareholders in the form of dividends. As a result, REITS offer some generous dividend returns, often in the range of 6-7%. However, because these dividends are "passed through" to investors (not taxed first), they do not qualify for the 15% dividend tax rate. Over the last few years, thanks to the real estate boom, many REITs have also seen significant price appreciation in addition to its generous dividend returns.
You can buy REITs at most brokerages in the same way you would buy regular stocks. The main problem I have noticed about REITs for individual investors is that there are very few services or newsletters that rate or follow REITs and offer meaningful recommendations.
The best method of picking REITs is to probably select them from the Valueline Investment Survey, which tracks REITS as one of its industry groups.