How To Earn $1,000 In Monthly Rental Income Without Being A Landlord

The allure of earning rental income, a long-standing cornerstone of wealth generation, is undeniable. Yet, the path of a landlord is not without its trials and tribulations. From tenant screening and maintenance to ensuring timely rent collection, the role can be far from the passive income many envision. However, there’s good news for those looking to tap into real estate’s lucrative potential without the associated hassles.

Effortless Earnings with REITs

Real estate investment trusts (REITs) offer a hassle-free avenue to real estate investment. Functioning akin to large-scale landlords, REITs manage income-generating properties, distributing most of their taxable income to shareholders as dividends. This requirement makes REITs particularly attractive for those seeking regular income.

One standout example is Realty Income Corp. (NYSE:O), self-titled “The Monthly Dividend Company.” With a history of 642 consecutive monthly dividends and an impressive record of increasing payouts, the company has become a beacon for investors seeking steady income. As of now, Realty Income pays a monthly dividend of $0.2565 per share, equating to an annual yield of roughly 5.5% at the current share price of $55.85.

For those aiming to earn $1,000 monthly from Realty Income, it would require ownership of approximately 3,878.36 shares (calculated by dividing $1,000 by the monthly payout of $0.2565). With shares priced at $55.85, this translates to an investment of about $216,606.40.

On a smaller scale, earning $500 monthly would need about 1,939.18 shares, equaling an investment of approximately $108,303.25.

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A More Direct Option

For an alternative approach to earning rental income, the fractional real estate investment platform Arrived offers a unique opportunity. This platform enables investors to buy shares in single-family rental properties, with an average dividend yield of 4.3%. Unlike traditional REITs, which offer a tiny share in a massive portfolio, Arrived allows for investment in individual single-family homes, a segment with its distinct appeal and growth potential.

Investing through Arrived is notably accessible, with properties priced at $10 per share and a minimum investment threshold of $100. However, it’s important to note that dividends on Arrived are paid quarterly, not monthly.

To achieve a goal of $1,000 monthly income (or $3,000 quarterly), an investor would need to accumulate shares that produce $12,000 in annual dividends. Based on the 4.3% average yield, this requires an investment of approximately $279,070 (calculated as $12,000 divided by 4.3%). This investment can be built up over time, starting with as small an amount as $100.

The Bottom Line

Investing in REITs like Realty Income or platforms like Arrived offers a feasible route to earning rental income without the traditional burdens of landlording. Whether through commercial trusts or direct investment in single-family homes, these options provide flexibility and accessibility to a broad range of investors. However, as with all investments, they come with inherent risks and uncertainties, underscoring the importance of thorough research and due diligence.

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