How to earn property-like income with just Rs 10 lakh in REITs

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Real Estate Investment Trusts (REITs) in India are trusts that own income-generating real estate assets (offices, malls, data centres) and distribute most of their income to unit-holders. This gives investors exposure to commercial real estate without needing to buy property, manage tenants or deal with local issues. Because REIT units are listed on the stock exchange like shares, they offer liquidity and transparency—something you don’t get with a direct property investment.

Typical yields and current market snapshot

For investors looking for income, the yield of a REIT is a key metric. As of late 2025, Indian REITs are delivering average distribution yields in the 6-7.5 percent range, which is competitive when compared to many traditional fixed-income options. In addition, many REITs are growing their distributions: for example, the four major listed REITs collectively distributed over Rs 6,000 crore in FY 2024-25, representing a growth of about 13 percent year-on-year. This combination of yield plus growth potential makes them interesting for first-time investors.

Building a Rs 10 lakh REIT ladder: how to do it

Here’s a simple roadmap to use a Rs 10 lakh investment to build a REIT ladder that balances income, diversification and growth:

Step 1: Allocate the amount Decide how you’ll split the Rs 10 lakh. For example, you might invest:

· Rs 6 lakh in established REITs with strong corporates and stable assets (to aim for yields in the 6-7.5 percent range)

· Rs 2 lakh in newer or smaller REITs with higher growth potential (but higher risk)

· Rs 2 lakh kept as cash or liquid fund to buy opportunistically if the market dips.

Step 2: Target staggered purchases Rather than invest the full amount at once, spread purchases over 3-4 tranches (say Rs 2.5 lakh each) every 2-3 months. That way you average out entry cost and don’t get hurt if the price jumps early.

Step 3: Income reinvestment or payout option Decide whether you want the income distributed monthly/quarterly and used elsewhere, or reinvested into more REIT units. If you reinvest, you compounding the income; if you payout, you build a mini “income machine” from the REITs.

Step 4: Review and escalate After 12 months, check whether your ladder is yielding as expected. Suppose the yield is 6.5 percent on Rs 8 lakh invested gives around Rs 52,000 per year. If your mark-to-market shows gain, you might move Rs 1 lakh more into REITs next year, raising your ladder.

Step 5: Risk control and exit plan Understand that REITs are sensitive to interest rates and commercial real estate risks. Decide in advance your exit rules: for example, “If yield falls below 5 percent” or “If portfolio unit price drops more than 20 percent” you’ll sell a portion. Keep at least one tranche in liquid form for flexibility.

What to watch out for (risks & caveats)

Even though REITs bring real estate exposure with lower hassle, they are not risk-free. Key risks include: asset-specific risk (e.g., a large tenant vacates), interest-rate risk (higher rates reduce valuation), liquidity risk (small REITs may have low trading volumes), and tax/structural changes (new laws may impact distributions). Also, while the yield is attractive, part of it may be “return of capital” or debt amortisation which may reduce future income. Hence, treat REITs as part of your diversified portfolio, not the sole core.

Final word

If you’re a first-time investor looking for a way into real-estate-type income without buying a property, REITs offer a compelling route. With yields around 6-7.5 percent, decent growth potential, listed liquidity and tax rules you can understand, you can build a Rs 10 lakh ladder over 1-2 years that offers meaningful income and optionality. Just remember: treat them like income-producing investments, spread your entries, and monitor your holdings.