If you’re interested in buying rental properties, but don’t want to spend your retirement chasing down rent cheques, then this might be the most important message you’ll ever read.
Today I’m going to show you how to collect up to $1,200 in monthly rental income without becoming a landlord. However, if you want to get in on this deal, then you have to act fast. To be eligible for the next round of payments, you have to take action by May 28. Let me explain…
8.1% trust goes ex-dividend in May
Becoming a landlord is one of the best income sources around. Each month, you collect a rent cheque. Every year, your property values go up a little. No wonder some people even retire on the profits earned from their income properties.
But as anyone in the rental game could tell you, becoming a landlord also comes with its fair share of headaches: fixing stoves, unclogging toilets, chasing down rent cheques. As I wrote about in a post earlier this week, not everybody is cut out to own rental properties.
However, there’s another way to invest in real estate without becoming a landlord. You never have to step foot on a property. Thousands of Canadians already use this method to collect steady, monthly income. Simply put, I’m talking about becoming a partner with an already established property owner through Dream Office REIT (TSX:D.UN).
Dream gives you all the perks of being a landlord minus the hassles. It owns real estate and collects rent from tenants; however, you’re the one who gets paid.
As a partner with this trust, you become the part owner of one of the largest realty empires in Canada. Altogether, the fund’s portfolio includes 185 properties totaling nearly 28 million square feet. Of this, more than 94% is currently occupied.
However, Dream is not your average landlord. As you could probably guess from the name, the firm specializes in office properties—an area of the rental market that is usually off-limits to small investors.
Needless to say, folks looking for office space have a lot more “rent money” than the nice people responding to an ad on Kijiji. Dream leases out its properties to AAA tenants such as Bell, Enbridge, and the Government of Canada. And because management usually locks in renters to multi-decade contracts, the firm’s cash flows resemble bond coupons.
But there’s another reason why partners do so well for themselves. Thanks to a legal loophole, the trust pays NO corporate income taxes. But in exchange for this benefit, the firm is required by law to pass on almost all of its monthly profits to partners.
That’s why this trust is gushing cash flow. Since Dream started sending out cheques to investors in 2002, it has never once skipped a monthly payment. Today, the firm pays partners a monthly distribution of 18.67 cents per unit, which comes out to an annual yield of 8.1%.
Source: Yahoo! Finance
With a yield this high, even a small investment can translate into a respectable income. For example, if you were to invest $25,000 in Dream today, you would immediately start collecting an extra $170 in monthly rents. If you were to invest $178,000 (about the cost of buying your own rental property), you can earn $1,200 in monthly distributions.
Collect an 8.1% rent cheque without becoming a landlord
Best of all, as a partner with this landlord, you never have to fix a broken toilet or chase down rent from tenants. A professional management team handles all of the daily operations. All you have to do is sit back and wait for the cheques to arrive in your mailbox.
The next round of distributions are scheduled to be mailed out in a few weeks. However, to be eligible, you have to become a partner by May 28. After that, you can expect to collect your first rent cheque on June 15.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Robert Baillieul has no position in any stocks mentioned.