Invest through REITs
Real Estate Investment Trusts (REITs) offer an easy and accessible way for investors to participate in the real estate market without the challenges of owning property.
These companies own, manage or finance income-generating real estate, making them a convenient alternative to traditional land investment. Think of a REIT as a landlord: it owns and operates a portfolio of properties, collecting rent from tenants and distributing most of its income to shareholders.
By law, REITs are required to pay out at least 90% of their taxable income as dividends, providing investors with a stream of passive income.
Many REITs are publicly traded, allowing you to buy and sell shares through a brokerage account, just like stocks. Additionally, some REITs specialize in specific regions or property types. For those interested in California’s thriving real estate market, here are two REITs with a strong focus on the Golden State.
Essex Property Trust (ESS)
Essex Property Trust is a REIT that focuses on acquiring, developing, and managing apartment communities in supply-constrained markets. Unsurprisingly, California plays a central role in the company’s operations. Its portfolio primarily targets Southern California, the San Francisco Bay Area, and the Seattle metropolitan area.
According to its latest investor presentation, Essex owns 254 apartment communities totaling around 62,000 units. Over 80% of the REIT’s net operating income comes from properties located in California, making it a name worth considering for those looking to tap into the state’s robust housing market.
The company currently pays quarterly dividends of $2.45 per share, translating to an annual yield of 3.2%.
Rexford Industrial Realty (REXR)
Rexford Industrial Realty specializes in industrial properties, with a particular focus on infill Southern California. This focus stems from the region being considered “the largest industrial market and consistently the highest-demand with the lowest-supply major market in the nation.”
Rexford’s current portfolio includes 424 properties, encompassing approximately 50.3 million rentable square feet. These properties are leased to a diverse array of tenants, with no single sector accounting for more than 25% of the REIT’s annualized base rent.
Paying quarterly dividends of $0.4175 per share, Rexford offers an annual dividend yield of 3.88%.
Invest outside the stock market
These days, REITs aren’t the only way to diversify into real estate. Crowdfunding platforms like Arrived have opened the door for everyday Americans to invest in rental properties across the U.S. — without the hefty down payment or the burden of property management.
With Arrived, you can invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants. The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase, and then sit back as you start receiving rental income deposits from your investment.
Another option is First National Realty Partners (FNRP), which targets necessity-based commercial real estate. The platform lets accredited investors [own a share of institutional-quality properties] leased by national brands like Whole Foods, CVS, Kroger and Walmart. Investors can enjoy the potential to collect stable, grocery store-anchored income every quarter.
