This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Profit Like a Landlord Without the Headaches

Stocks in this article: LXP SIR ADC

NEW YORK ( TheStreet) -- Once upon a time, I owned an apartment building with 15 residential rental units. I hired a property manager to deal with the residents and keep an eye on the upkeep of the building and grounds. She charged me 7% of the gross total rent.

What I didn't understand was that some property managers make money by doing the maintenance and repairs themselves (through their employees) and billing it as a way of making a profit.

For instance, one of the apartment air conditioners stopped working. The property manager called and asked me if her crew could fix it. I asked, "How much will it cost me?" She said, "I'll let you know."

A few days later she called and said it could be replaced for $300 and repaired for $200. I said, "Repair it." Two weeks later I did my own belated investigating and discovered I could have repaired it myself for $100.

When I wasn't negotiating with the property manager (I fired the first one and hired another) I was constantly concerned with filling vacancies and dealing with the usual renter problems. My net annual rate of return (cap rate) never exceeded 8%, and I had to tie up a lot of my investment capital in the ownership of the apartment complex.

Thankfully, I was contacted by an international investment group that wanted to buy my building, for a small profit. It was a good learning experience and it helped me to remember there are smarter ways to derive income from residential or commercial properties without the headaches of ownership.

As Dr. Steve Sjuggerud, the editor of the popular DailyWealth publication, has pointed out to subscribers:

"When you can buy the best properties in the world and collect large amounts of rental income, it's probably the safest and most lucrative investment you could ever make.

"The risks are low... your money is invested in something real and tangible (the valuable property)... and the rental income and capital gains can make you wealthy, especially if you buy at the right price."

That has been my experience as well, IF, you buy the shares of an experienced real estate company at a reasonable price per share.

Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust. Enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.

So I began accumulating shares of undervalued, well-managed real estate investment trusts that offered at least a 5% dividend from the company's funds from operations, or FFO.

One that I bought in November at $9.51 a share is Lexington Realty Trust (LXP). As of January 8, 2013 LXP closed at $10.76-a-share.

With its 60 cents annual dividend the current yield to price is close to 5.6%. When I purchased at $9.51 the yield to price was 6.3%, and because I waited for the price I wanted my shares are now up 13%. I'm not bragging, just pointing out how well this process can work for the prudent, patient investor.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs