Live Rent-Free in Your House Using This Hack
The average rent in the United States is $1,958, according to NerdWallet, but did you know you could completely cover this cost by investing in a real estate investment trust (REIT) that pays dividends?
It takes a lot of capital to do so, but if you can swing it, you can essentially live rent-free.
How it works
Let's say you find a single-family home that costs the national average of $1,958 per month. Based on that monthly rate, you will need annual dividend income of $23,496 to cover your rent.
Don't Miss:
Investing in real estate just got a whole lot simpler. This Jeff Bezos and Dara Khosrowshahi-backed startup will allow you to become a landlord in just 10 minutes, and you only need $100.
Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here are 3 high-yield investments to add significant income to your portfolio.
To cover your rent, you could invest in Invitation Homes (NYSE:INVH), which owns and manages a portfolio of approximately 80,000 homes for lease across 16 markets in the U.S. where it's more affordable to lease a home than it is to buy.
Invitation Homes currently pays a quarterly dividend of $0.28 per share, equating to an annualized dividend of $1.12 per share and giving its stock a yield of approximately 3.43% based on its closing price on February 16.
To earn $23,496 annually from Invitation Homes, you'll need to buy about 20,948.5 shares, which will cost about $685,016 based on its closing price of $32.70 on February 16.
To calculate this, you take your desired annual income, which is $23,496 in this case, and divide it by the dividend yield when expressed as a decimal, which is 0.0343 in this case. So, $23,496 / 0.0343 = $685,015.
Important note: this calculation does not include participating in a dividend reinvestment program, or DRIP for short, since you will be taking the payments as cash to use to cover your rent.
Invitation Homes is also a serial dividend grower, which will help if your rent increases. Invitation Homes has raised its annual dividend every year since its initial public offering in 2017, making it qualify as both a high-yield and dividend-growth play.
Again, it takes a lot of capital to generate enough dividend income to cover your monthly rent, and you may want to consider diversifying across several REITs to minimize your single-stock risk and sleep well at night.
Read Next:
Commercial real estate has historically outperformed the stock market, but few investors have the capital or resources needed to invest in this asset class. A platform backed by industry giant Marcus & Millichap is changing that, allowing individuals to invest in commercial real estate with as little as $5,000.
Collecting passive income from real estate just got a whole lot simpler. A new real estate fund backed by Dara Khosrowshahi gives you instant access to a diversified portfolio of rental properties, and you only need $100 to get started.
Image Credit: Shutterstock
"ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now!
Get the latest stock analysis from Benzinga?
This article Live Rent-Free in Your House Using This Hack originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
