Got less than $1000? Here’s a great way to earn massive passive income from real estate.
It takes money to make money. This is especially true in real estate investing, where the initial cost of purchasing a rental property can reach tens of thousands of dollars.
However, there are some less expensive options. real estate investment trusts (Real estate investment funds) is the best option for those who have less than $1,000 to invest. They allow anyone to start making money Passive income from real estate Almost directly.
EPR properties (EPR -0.81%) It is a real estate investment trust with tremendous passive income potential. This is why budding real estate tycoons might want to consider buying shares.
A unique real estate investment fund
EPR Properties is a specialty REIT focused on owning experiential properties. The company owns 363 properties across the United States and Canada, including theaters (40% of its portfolio), dining and gaming venues (24%), attractions (11%), skiing (8%), and fitness and wellness (4% ). Experiential accommodation (3%), gaming (2%), and cultural (1%). The REIT also has a small education portfolio (7% of total – early childhood education and private schools).
It leases these properties to operating companies primarily on a long-term basis Net rents. These agreements provide fixed rental income because tenants cover variable costs such as building insurance, maintenance, and property taxes. This gives the company relatively predictable cash flow, the bulk of which it pays to shareholders in dividends.
EPR Properties is currently paying $ Monthly profits At $0.275 per share ($3.30 per year), it can easily be covered by Funds from operations From $5.05 to $5.15 per share in 2023). It means 7.7% Profit return At the last share price. In other words, every $100 invested in a REIT will yield about $7.70 per year Dividend. This is significantly higher than most other REITs (sector average return is 4.5%) and most other stocks ( Standard & Poor’s 500The dividend yield is 1.5%).
Outstanding growth potential
EPR Properties has invested over $6.7 billion to build a diversified experiential real estate portfolio. However, the company believes it is only scratching the surface of its potential. It estimates there is an addressable market opportunity worth more than $100 billion for experiential properties outside of the theater industry through Sale and leaseback transactions and build to suit development or redevelopment projects.
The company expects to invest $200 million to $300 million this year to expand its portfolio. During the first half, it spent $98.7 million to acquire a fitness and wellness property ($46.7 million) and on pilot development and redevelopment projects that fit the design. The company has also committed to investing $224 million over the next two years in additional development and redevelopment projects. These investments will increase rental income and further diversify its portfolio away from the theater industry. The company intends to finance these investments through free cash flow after dividends and its strong investment-grade balance sheet. EPR had $99.7 million in cash and no borrowings on its $1 billion credit facility at the end of the second quarter. It also only has $136.6 million in debt outstanding through the end of next year. This gives it a lot of financial flexibility to finance new investments.
At the same time, the company’s existing portfolio offers growth potential. EPR recently completed a comprehensive restructuring agreement with theater operator Regal, one of its largest tenants. The new lease features a fixed annual lease payment of $65 million that escalates by 10% every five years. In addition, Regal will pay an annual percentage rent on gross sales at its leased locations in excess of $220 million. This feature enables EPR to collect more rent during a blockbuster box office year.
Rental growth from new and existing properties could enable EPR Properties to increase its already attractive earnings. While EPR suspended its dividend during the pandemic and reinstated the dividend at a lower rate in 2021, its new level is more sustainable. It allows the REIT to finance new investments and maintain its financial strength. Meanwhile, it has already begun increasing its dividend, giving investors a 10% raise in the past year.
Low cost, high return real estate investment
REITs are a very low-cost way to invest in real estate. EPR shares currently cost less than $45 apiece. At the same time, the company pays a very attractive dividend that could grow in the future. This makes it seem like a smart way to start collecting passive income from real estate.