I mentioned a little while ago I want to get an additional 100K passive income a year and was looking for investment ideas. I looked into various high cap rental markets like Tampa and Orlando. This week I decided to put some money into REITs as a way, if not the only way, to get to that 100K goal.
Specifically I bought OHI and MPW, both healthcare REITs. OHI specializes in “Skilled Nursing Facilities”, and MPW owns a bunch of hospitals.
Both are paying 7.7% dividend yield on current prices.
The biggest risk is Senate passing Trumpcare and thus cutting healthcare payment significantly. But that to me is actually an opportunity. I don’t think Trumpcare is sustainable politically. If passed that just spells the demise of GOP and President Sanders will put the country into single payer come 2020. In that scenario I will have another 3.5 years of buying healthcare REITs on the cheap. Second risk is rate hikes. I think it’s already baked into the price.
My plan is to buy little bit of OHI and MPW every month, and in 3 to 4 years hopefully I will have enough to generate that $100K annual income.
They are good. Consider CCP too. IMO, CCP better than OHI better than MPW. You can also spread it 1/3rd each.
Note that all REIT dividends are taxed as regular income while hanera’s (since everyone knows I am taking his example) AAPL dividends are qualified and treated as long term capital gain tax rate at 15% or 20% !
Yeah, I need to put in 1M. But investing in high cap rentals out of state is also pretty risky. Cap rate is most likely not what’s advertised, and unexpected expenses can eat me alive. At least with REIT I can look at the history and if it doesn’t give me 7% yield, 5% is not too shabby.
If I can have REIT take care of the income side of the equation for me, I can focus my RE dollars on pure growth and appreciation in local markets. I am much more comfortable with that because I know the local markets well…
Why is there a big jump in share price of CCP? The company was incorporated in 2015 and is based in Chicago, Illinois. Care Capital Properties, Inc. operates independently of Ventas, Inc. as of August 18, 2015.
I looked into crowdfunding as well. Never really convinced of the model. I actually like Home Union’s model much better. It’s not crowdfunding. Rather it’s kind of like an online shopping mall of rentals. It allows people buy out of state rentals online and have it fully managed. So one can build a diversified portfolio very quickly. The big downside is Home Union charges very high management fee.
Why not diversify. .Why put into one or 2 reits…Utilities and oil stocks and other high yield stocks can pay high dividends…Exxon or BP pay good dividends…To me Reits are like bond funds…maybe you should look a junk bond funds too…Best bet is a NNN property with a Macdonalds type tenant
REITs exactly like holding real estate, but you share a portion of real estate managed by someone else. There are plenty of REIT types,such as Hotel REITs, Mall REITs, data center REITs, Mortgage REITs,Rental REITs, Health care and many different types.
For real estate person, it is easier to calculate the risks, return and yield etc. Better to invest in places where we have hold and knowledge. People will know when to buy and sell.
For REIT analysis, this guy is too good and knowledgeable. Read all his posting and grab the REITs related discussions.