This California handyman has found an ingenious way to evict squatters — but it’s a dangerous tactic. Here are 3 ways to invest in real estate without putting your safety at risk
When Flash Shelton, founder of the United Handyman Association, finds squatters at his mother’s house, the only way he can get rid of her unwanted guests – after the local police say they can’t help – is to bypass the squatters.
“I called local law enforcement, and as soon as they saw there was furniture in the house, they said I had a random situation,” Shelton told Stuart Varney of Fox Business Channel. “They basically have no jurisdiction and they can’t do anything.” “So, I analyzed the laws over the weekend and basically found out that until a civil action was taken, the squatters had no rights, so if I could switch places with them and become squatters myself, I would have the rights of the squatters.”
do not miss
He had his mother write and notarize a lease for him, and he watched the house early one morning, waiting for the squatters to leave. When they finally left, Shelton entered the property, set up cameras, and waited for them to return.
Chilton’s scheme worked and the squatters left – but not without putting him in a potentially dangerous situation.
Dealing with squatters, or even tenants, can become complicated and expensive. Fortunately, there are safer and easier ways to make your mark in real estate.
Squatters’ rights
Taking the law into your own hands is never recommended, especially in a heated situation such as an eviction. That’s why Shelton is now an advocate for giving landlords more rights in these situations.
A squatter is a person who occupies a piece of land or a building that they have no legal right to occupy – and without paying rent.
According to the American Apartment Owners Association (AAOA), most states have laws that give squatters rights to occupy property “in the event that the rightful owner does not vacate or take action against the property,” and they vary from state to state. These laws usually only apply if the squatter has been illegally occupying a space for a set period of time – after that, they will have acquired “negative possession”, and local law enforcement won’t be of much help.
Squatters should not be confused with trespassers. A blog post on the AAOA website states: “A trespasser enters the property through unlawful entry and has no facilities, furniture, or any form of prior lease. As a result, trespassers can be removed for violating local loitering or trespassing laws.”
“I feel bad that I can’t help everyone,” Shelton said in an interview with FOX Business, who now runs a service to help other landlords deal with squatters. “I’m trying to change the laws.”
If the risks of serial squatters and the other trials and tribulations of being a landlord don’t appeal to you, here are three ways you can invest in real estate without all the hassle.
Real estate investment funds
Investing in a real estate investment trust (REIT) is a way to take advantage of the real estate market without having to buy a home, worry about checking tenants, repairing damage, chasing down late payments, or even facing intruders.
REITs are publicly traded companies that own income-generating properties such as apartment buildings, shopping malls, and office towers. They collect rent from the tenants and pass this rent on to the shareholders in the form of regular dividend payments.
Basically, REITs are giant real estate owners. To qualify as a REIT, a company must pay at least 90% of its taxable income to shareholders as a dividend each year, in addition to other requirements. In contrast, they pay little or no income tax at the corporate level.
In general, REITs are described as high-yield investments that offer solid dividends and moderate, long-term capital appreciation potential.
Also, because REITs are publicly traded, you can buy or sell shares at any time and your investment can be as small or as large as you like – unlike buying a home, which typically requires a large down payment followed by a mortgage.
Read more: This doorman in Vermont amassed a fortune of $8 million without anyone knowing about it. Here are the two simple ways Ronald Reed made rich — and they can do the same for you.
Real estate investment funds
Another easy way to invest in real estate without having to pick and choose which stocks to buy and sell is through exchange-traded funds (ETFs).
As the name suggests, ETFs are traded on major exchanges, which makes them convenient to buy and sell. Some ETFs passively track the index, while others are actively managed. They all charge a fee – referred to as the management expense ratio – for managing the fund.
For example, the Vanguard Real Estate ETF (VNQ) provides investors with broad exposure to US real estate investment funds. The fund currently owns 164 shares with total net assets of $64.2 billion. Over the past ten years, VNQ’s net asset value has increased by 6.25%. The administrative expense rate is 0.12%.
Another example is the SPDR Real Estate Sector Fund (XLRE), which aims to replicate the real estate sector in the S&P 500. It currently has 31 holdings and an expense ratio of 0.10%. Since the fund’s inception in October 2015, the net asset value of XLRE has increased by 6.73%.
Each of these ETFs pays out quarterly dividends.
Crowdfunding platforms
Through the crowdfunding platform, you can buy a percentage of physical real estate – from rental to commercial real estate. You can even buy a stake in digital real estate.
If you are an experienced investor looking to increase your stake in real estate, there are also options for accredited investors who often have minimum investments that can run into tens of thousands of dollars or more.
If you are not an accredited investor, many platforms allow you to invest smaller amounts, up to $100.
These online platforms make real estate investing more accessible by streamlining the process and lowering the barrier to entry.
Sponsors of crowdfunded real estate deals typically charge investors a fee – usually 0.5% to 2.5% of whatever amount you’ve invested.
What do you read next
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
