I know people who like to buy, fix and manage real estate rentals. I admire their energy but often wonder if they have done the math. I’m not talking about the investment return, although that is certainly part of the evaluation. I’m talking about the number of hours they spend to earn the return on their investment. Sadly, I think many would be appalled if they did the math. Some are probably doing well, but many are not. If they raise the rent due to property taxes or other ongoing costs to maintain their properties, they then have the potential hassles of finding new and good tenants. Many have shared their tales of woe regarding destructive tenants. The building and land might become more valuable, but that value is useless unless you sell the property. It seems like a lot of time and work to me. O is a good way to see how I buy real estate for growing dividends.
There is a better and easier way. I own real estate, but I don’t have to talk to the tenants, fix the roof, replace the furnace, mow the lawn, pay the property taxes or deal with issues you cannot expect when you own a building. I own investments like Realty Income Corporation. In our accounts we hold a total of 752 shares. Those shares produce over $2,000 per year in dividends, and the dividends are growing every year. Realty Income (O) monthly dividends are supported by the cash flow from over 5,900 real estate properties owned under long-term lease agreements with commercial tenants. To date, the company has declared 592 consecutive common stock monthly dividends throughout its 50-year operating history and increased the dividend 103 times since Realty Income’s public listing in 1994. If you want to learn more about O, then read the post from Seeking Alpha on the link below. “Reason #3” in the article is worth reading. If you are not comfortable owning just O, then consider ETF real estate options like FREL, VNQ, SCHH or IYR. Most of these own shares of O.