A $14 Trillion Passive Income Investment Opportunity Is Hiding In Plain Sight (And It’s Easier To Access Than You Think)

Commercial real estate is vital to everyday life. Most of us spend some time each week going to the grocery store, eating at a restaurant, or filling up our cars with gas. Those routine activities require physical buildings to provide us with those goods and services. And these buildings are a potential passive income goldmine hiding in plain sight.

Exist an estimated $14 trillion worth of commercial real estate in the US and Europe suitable for net leasinga shared arrangement where a tenant pays rent and other agreed expenses. These leases provide their owners with a very stable condition passive income.

What might surprise you is that you don’t have to become a homeowner to access this passive income. More real estate investment trusts (REITs) focus on net leasing real estate. They allow anyone to sit back and collect a steady stream of passives dividend income for far less work and money than it takes to buy and manage one of these buildings yourself.

The king of net leasing REITs

Real estate income (A 1.16%) is the largest REIT focused on net lease real estate. The company owns approximately 15,450 income-producing properties in the US and Europe. Its holdings include grocery stores (10.2% rent), restaurants (4.9% quick service and 4.2% casual dining), convenience stores (9.4%) and many other property types. It leases these buildings to high quality retailers such as general dollar, Walgreensand 7-Eleven. While it focuses on retail properties (79.4% of its rent), Realty Income also invests in industrial building (14.9%), gaming properties (3.3%) and other types of properties such as data centers (2.8%).

The REIT pays out less than 75% of its stable rental income to investors in dividends each month. At recent prices, it offers a dividend yield of over 5%. At this rate, every $1,000 you invest to buy shares of Realty Income would generate over $50 in passive income annually. You don’t even need that much money to get started – shares of Realty Income cost a little more than $60 each these days, and you only need to buy one share at most online brokerages (and less than that if the broker offers fractional actions).

Real estate uses the income it retains (and other sources of capital) to invest in more income-producing real estate. This strategy enabled REITs to steadily increase its dividend. It has increased its payout for 107 consecutive quarters and 126 times overall since going public in 1994. With a total addressable market of $14 trillion for net rentable real estate, this REIT has plenty of runway to continue to grow

A well-diversified net leasing REIT

WP Carey (WPC 1.33%) is one of the largest net leasing REITs. It has a well-diversified portfolio of high quality, operationally critical properties. It at present has nearly 1,300 net lease properties in North America and Europe (35% industrial, 29% warehouses, 21% retail and 15% other properties). Its other properties also include 89 self-storage properties, four hotels and two student housing properties that it operates.

The REIT aims to pay investors 70% to 75% of its stable rental income through dividends each quarter. WP Carey currently offers a dividend yield approaching 6%. Investors can buy shares for less than $60 a piece at recent prices.

WP Carey has reorganized its net lease portfolio over the past year. It exited most office properties and sold a portfolio of self-storage properties back to the operator. Those sales brought in cash to reinvest in other net lease properties. For example, WP Carey recently spent $258 million to buy a portfolio of 19 industrial facilities, two newly constructed distribution centers and two fitness facilities. These new investments will increase his income, which will allow REIT to raise its dividend.

The properties you use every day can be a source of liability income

We routinely go into grocery stores, restaurants, convenience stores, or the gym. WE probable not even thinking about their income potential. However, most of these businesses lease their space from a real estate investor, such as a REIT, which provides passive income to their owners. You can access these income streams by investing in a REIT focused on these properties, such as Realty Income and WP Carey. Investing a little money every month in a net lease REIT can help you build a real estate empire that produces ever-growing passive income.