How to Invest in Property Without Plungers, Plywood, or People Who Don’t Pay Rent
There’s an old saying that “real estate is the best investment you can’t screw up.” Which is only true if you don’t buy a duplex occupied by a charming couple who breed cats for a living.
Let me explain.
My Real Estate Misadventure (aka: The Duplex Debacle)
In the early 2000s, I had a brilliant idea: Buy a duplex. Rent out both units. Retire early. Play golf. You know—the dream.
The reality?
I got two tenants straight from the casting call for America’s Got Problems. The upstairs guy—a drummer—held nightly band practices from 9 p.m. to 2 a.m. They weren’t good. I can’t even confirm they were sober.
The downstairs couple was equally colorful. They were into “rescuing” animals. I assumed that meant a dog or two. It turned out to be 17 cats, 2 ferrets, and a pig named Brenda. Brenda was surprisingly well-behaved Vietnamese pot-bellied pig – George Clooney’s favorite pet. The rest of the crew was not.
Between the smells, noise, and my newfound side gig as a 24-hour maintenance hotline, I began to wonder if investing in real estate was less “passive income” and more “full-time job with negative pay.”
One Sunday morning, as I unclogged a suspiciously familiar hairball from the garbage disposal (Brenda again), I had an epiphany: There must be a better way.
Enter: The Passive Approach to Real Estate
And indeed, there is a better way. A way to invest in real estate without tenants, toilets, or animal rescues. It’s called REITs—Real Estate Investment Trusts.
Imagine owning a piece of a giant shopping center, an apartment building in Miami, or a warehouse full of yoga mats and pet food—all without ever lifting a hammer, chasing rent checks, or learning to say “You’re being evicted” in a calm, authoritative tone.
And the best part? They pay dividends. Beautiful, consistent, sit-in-your-recliner-and-watch-them-roll-in dividends.
Why Retirees Love REITs
- Monthly or quarterly income (thank you, dividends).
- Diversification across properties, sectors, and locations.
- Professional management (no more late-night calls about broken dishwashers).
- Liquidity (unlike my duplex, which took 9 months and a minor exorcism to sell).
- Tax advantages (some distributions are considered return of capital—ask your CPA, he gets excited about that kind of thing).
Two Ways to Invest Passively
There are two main routes to go passive in real estate:
- Individual REITs – Own shares in a single real estate trust that focuses on a specific area: apartments, shopping malls, data centers, etc.
- REIT ETFs – Own lots of REITs in one tidy package for instant diversification. Like trail mix, but with more income and fewer raisins.
Let’s dive into some of the best options.
🏢 Six Top REITs for Retirees
These are time-tested, dependable, and come with none of the chaos of being a landlord. No Brenda, guaranteed.
1. Realty Income (O)
The “Monthly Dividend Company.” Pays dividends every month like clockwork. Owns over 13,000 commercial properties—drugstores, supermarkets, gyms, etc. Think of it as a financial golden retriever: dependable, loyal, and occasionally steals your sandwich (via taxes).
2. W.P. Carey (WPC)
Diversified into warehouses, industrial, and retail across the U.S. and Europe. Kind of like if your cousin got a passport, started investing in Germany, and actually knew what he was doing.
3. Public Storage (PSA)
Owns self-storage facilities. You’d be amazed what people pay to store things they’ll never use again. Reliable, recession-resistant income. Plus, no toilets to fix—just padlocks.
4. Digital Realty (DLR)
Owns data centers—giant warehouses filled with servers. It’s like real estate meets the internet. When you Google “how to get cat pee out of carpet,” you’re helping pay their dividend.
5. Equity Residential (EQR)
A major player in high-end apartments in urban markets. Think San Francisco, Boston, and other cities where people pay $3,000 a month to live in a closet with exposed brick.
6. Healthpeak Properties (DOC)
Invests in medical offices, life science campuses, and senior housing. Let’s face it—we’re all getting older. Might as well earn income from aging gracefully.
📦 Six Top REIT ETFs for Easy Diversification
Want a one-and-done solution? These ETFs hold dozens or even hundreds of REITs, so you don’t have to worry about picking the wrong one (or explaining to your spouse why you bought a cannabis warehouse REIT by accident).
1. Vanguard Real Estate ETF (VNQ)
The granddaddy of REIT ETFs. Owns over 160 REITs across all sectors. Low cost, high quality, extremely popular—kind of like the Costco of real estate investing.
2. Schwab U.S. REIT ETF (SCHH)
A low-cost alternative to VNQ with a slightly different mix. Perfect for retirees who love a bargain and hate fees.
3. iShares U.S. Real Estate ETF (IYR)
Tracks the big names in real estate. A little pricier than VNQ, but still rock-solid. Think of it as the BMW of REIT ETFs—smooth, dependable, but bring a bigger wallet.
4. Fidelity MSCI Real Estate Index ETF (FREL)
Cheap, diversified, and solid. Includes big holdings like American Tower and Prologis (aka the stuff you don’t want to manage yourself). Like a sensible pair of shoes—boring, but they’ll take you where you need to go.
5. Invesco S&P 500 Equal Weight Real Estate ETF (EWRE)
Equal weighting gives smaller REITs more room to shine. Good if you believe the little guy deserves a shot, but don’t want to live next to him.
6. Hoya Capital High Dividend Yield ETF (RIET)
A newer ETF with a focus on high-dividend REITs. A bit like shopping at a farmer’s market: juicy yields, a little unconventional, but oh so tasty if you know what you’re getting.
How to Get Started
Getting started with passive real estate investing is easier than opening a jar of pickles (and I say that as a man who once strained a muscle doing exactly that).
- Open a brokerage account. Vanguard, Schwab, Fidelity, etc.
- Choose your REIT or REIT ETF.
- Buy shares like any other stock.
- Receive dividends—automatically.
- Reinvest or spend the income. Preferably not on a duplex.
Final Thoughts from a Recovering Landlord
Let me be clear: I’m not anti-real estate. I’m anti-repairing-broken-garbage-disposals-at-11pm. I’m anti-tenants-who-pay-in-Crystal-Light-coupons. I’m anti-litter-box-in-every-room real estate.
But passive real estate? That’s a different story.
Today, I get paid while sipping coffee. My “tenants” are companies like Amazon and Walgreens. My biggest maintenance headache is deciding whether to reinvest my dividends or use them to buy more cat-free coffee.
So if you’re a retiree looking for income, safety, and sanity, skip the duplex and consider the quiet beauty of a REIT dividend.
Brenda the pig would approve.
This material is an excerpt from my book: The Passive Landlord: Earn Safe 12% Returns Investing in REITs, available at Amazon.com
Disclaimer:
This post is for informational and entertainment purposes only. It is not financial advice. Talk to your financial advisor, tax professional, or Brenda before making investment decisions.