100K Passive Annual Income

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.


PS: I owe the healthcare REIT idea to this discussion thread on Warren Buffett

I learn a lot from you guys. Keep on sharing!

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How you deal with the fact that the dividend is taxed at income tax rate rather than 15% qualified dividend tax rate?

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That’s fine. I make money, I pay taxes. It’s no different from my other income sources.

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% !

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To get $100k income at 7.7% you would have to put over $1m in those reits. .seems high risk to me…

OK. I will look into it.

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…


I bought a REIT in 2007 (ICF), the same year I bought the S&P Index Fund (VTI).

After 10 years:

ICF returned 40% (including dividends)
VTI returned 133% (including dividends)

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10 year chart for OHI, S&P 500 and ICF

Share price at the end of 10 years,
OHI up 116.72%
S&P up 64.56%
ICF up 10.22%

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OMG ! I am really Amazed !

I feel the same, but REITs as good as investing in real estate. If we identify well managed funds, it is really great.

I was watching NLY from $9.5 onwards came out by $11, but this is mortgage REIT a risky one, but paying consistent dividend for more than 10 years.

DCA purchase of REITs improves long term return :slight_smile:

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 had 1000 shares of CCP along with OHI…etc, but came out of market fully except TSLA and NVDA. I may even come out these soon.

No more investment until end of this year.

Realize CCP is a spinoff from VTR. Recent bad news,

Investigation for possible breach of fiduciary duty

CCP is about to be delisted :slight_smile:

You don’t hold shares long term? Still trading?

The universe of REIT’s is HUGE…

It is better to invest in listed companies than other companies.Avoid crowdfunding for liquidity reasons.

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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.

Crowdfunding is great so long as you are the fundee, not the funder :slight_smile:

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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.