Getting Started in Real Estate

It’s been awhile since I’ve been able to invest in any stocks. This mostly has been due to the fact that I’ve had a lot of expenses related to my radiology education: books, conferences, travel/hotels, etc. Fortunately, I will be getting reimbursed for most of these expenses and then will be able to use that money to invest. I also moved some money into an options trading account, which I will mostly use to sell premium.

There’s a few ways of getting started in real estate, including buying/selling houses/land, rental income, and real estate investment trusts (REITs). FI Fighter has an excellent article, REITs vs. Rental Property (Comparing Apples to Oranges), that explains some of the differences.

Rental property sounds great, but would take up too much time at this point in my life. Also, I don’t have anywhere close to enough money yet to be able to put up the 25% or so of the mortgage needed to offset the insurance requirement. So, I’ll keep investing in REITs until I’m able to diversify even more.

REITs buy and sell just like stocks and, due to their unique tax structure, pay out high dividends. This unique tax structure also means that the dividends are not considered qualified and are instead taxed as ordinary income.

Almost a year ago I had bought a REIT called Realty Income (O) at $45/share, but then ended up selling it because I wanted to move it into my Roth IRA in order to negate the effects of the higher taxes.

Yesterday I purchased 50 shares of Realty Income (O) at $41.449/share and 22 shares of a healthcare-oriented REIT called Ventas (VTR) at $62.899/share.

Realty Income pays an annual yield of 5.29% that is paid monthly. Ventas pays an annual yield of 4.59%, paid quarterly.

These purchases will add $173.30 in annual dividends, bringing my forward 12-month dividends to $2,155 ($179.58/month).

My portfolio now includes 20 companies.

Company Symbol Shares Price Yield 12-Month Forward Dividend
Realty Income Corporation O 50 41.449 5.29% $109.50
Ventas, Inc. VTR 22 62.899 4.59% $63.80

Full disclosure: Long O, VTR

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4 Responses

  1. FI Fighter says:

    Thanks for the mention! REITs are great, and an excellent (easy) way to gain exposure into real estate.

    • scott says:

      No problem. Your site has been included in my Feedly investing feed for quite some time. Appreciate all the advice!

  2. Alan says:

    You are making this real estate thing too complicated, to find the right property just run it through http://realbench.net first, if it is green you buy it and if it is red you don’t, it is that simple. That’s what everyone in the real industry is doing anyways. Share some of your tricks here at twoinvesting.com that way we can help each one another .

    • scott says:

      Hi Alan, tell me more about this realbench site. What factors go into determining if you should buy? Investing in REITs seems very simple to me…can’t get much more complicated than that.

      Scott

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