雅虎香港財經 'This is just theft': California couple falls prey to serial squatters who refused to pay rent for months — 3 better ways to invest in real estate (without the trials of being a landlord)
A couple from Sacramento, California, fell prey to a pair of serial squatters who left their property in a state of disrepair after months of living there rent-free.
Mom-and-pop landlords Karen and Skip Morairty rented their Fair Oaks home to Ann and Mario Figueroa, who seemed like “wonderful people” and provided all the required documents — including a credit report and 401(k) statement — as reported via an ABC10 Originals investigation.
Don't miss
Millions of Americans are in massive debt in the face of rising rates. Here's how to get your head above water ASAP
Save big on your holiday shopping with an app that’s already saved Americans $160 million
Owning real estate for passive income is one of the biggest myths in investing — but here's how you can actually make it work
The Morairtys handed over the keys to the Figueroas in August 2022 — and the problems began almost immediately. From September to December, the tenants were late paying their rent due to two alleged deaths and a serious illness in their family. They stopped paying altogether before Christmas.
Stuck paying the mortgage on their investment property out of their own pockets, the Morairtys reached out to their real estate agent, Gary Meek, for help. He told ABC10 he’s had “hours of conversations with Karen — frustrated, upset, crying.”
“Unfortunately, there are criminals out there that use amazing talent and education for bad,” Meek added — an opinion backed up by property manager Barry Mathis, hired by the Sacramento couple hired to help them evict the Figueroas, who described the squatters as “professional, deadbeat tenants” who have “learned to play the game.”
'They don't see the landlords as a victim'
Upon further investigation, ABC10 found that the Figueroas had squatted in at least eight houses in Sacramento County alone — some just blocks from each other — before targeting the Morairtys.
Former victim Tari Gunn told the news outlet they used the same “deaths in the family” excuses to live rent-free on her property for months. She reflected on the time and money she had to spend to evict them: “I just incurred so many financial issues … it was really hard.”
Mathis blamed California’s legal system for enabling squatters by making eviction such a difficult and costly process.
“We’re so much into victims’ rights but … in this case, they don’t see the landlords as a victim,” he said.
Mathis believes the law treats landlords like they’re all massive corporate entities with endless funds when in fact mom-and-pop landlords own and manage about 70% of small rental properties in the U.S., according to the National Association of Realtors.
“This is just theft,” he added. “I think that our owners’ rights have been taken.”
Nine months after the Figueroas moved into the Morairtys’ home, they were finally evicted — leaving the property and backyard a mess. In total, the couple has lost $15,000 in rent, plus damages. They’ve decided to sell the property to cover their losses.
“I just feel sorry for the next [victim],” said Karen Morairty.
If the risk of serial squatters and the other trials and tribulations of being a landlord don’t appeal to you, here’s three ways you can invest in real estate without all the hassle.
Read more: Can I collect my dead spouse’s Social Security and my own at the same time? Here are 5 secrets of ‘survivors benefits’ you need to know
Real estate investment trusts
Investing in a real estate investment trust (REIT) is a way to profit from the real estate market without having to buy a house or worry about screening tenants, fixing damages, chasing down late payments or even facing intruders.
REITs are publicly traded companies that own income-producing real estate like apartment buildings, shopping centers and office towers. They collect rent from tenants and pass that rent to shareholders in the form of regular dividend payments.
Essentially, REITs are giant landlords. To qualify as a REIT, a company must pay out at least 90% of its taxable income to shareholders as dividends each year, in addition to other requirements. In exchange, they pay little to no income tax at the corporate level.
Generally, REITs are described as high-return investments that provide solid dividends and the potential for moderate, long-term capital appreciation.
Real estate ETFs
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). You can think of an ETF as a diversified portfolio of stocks.
And as the name suggests, ETFs trade on major exchanges, making them convenient to buy and sell. Some ETFs passively track an index, while others are actively managed. They all charge a fee — referred to as the management expense ratio — in exchange for managing the fund.
The Vanguard Real Estate ETF (NYSEARCA:VNQ), for example, provides investors with broad exposure to U.S. REITs. The fund currently holds 160 stocks with total net assets of $56.5 billion. Over the past 10 years, VNQ’s net asset value (NAV) has grown 5.50%. Its management expense ratio is 0.12%.
You can also check out the Real Estate Select Sector SPDR Fund (NYSEARCA:XLRE), which aims to replicate the real estate sector of the S&P 500 Index. It currently has 31 holdings and an expense ratio of 0.10%. Since the fund’s inception in October 2015, XLRE’s NAV has grown 5.19%.
Both of these ETFs pay quarterly distributions.
Crowdfunding platforms
Crowdfunding refers to the practice of funding a project by raising small amounts of money from a large number of people. This can include real estate.
Through a crowdfunding platform, you can buy a percentage of physical real estate — from rental properties to commercial properties. You can even buy a stake in digital real estate.
Some options are targeted at accredited investors, sometimes with higher minimum investments that can reach tens of thousands of dollars.
If you’re not an accredited investor, many platforms let you invest small sums, even as low as $100.
Such platforms make real estate investing more accessible to the general public by simplifying the process and lowering the barrier to entry.
Sponsors of crowdfunded real estate deals usually charge fees to investors — typically in the range of 0.5% to 2.5% of whatever you’ve invested.
Correction, Nov. 27, 2023: Previous versions of this article stated the squatters lived rent-free for nine months, when in fact their total stay was nine months starting August 2022 and they had stopped paying in December, according to ABC10.
What to read next
Rising prices are throwing off Americans' retirement plans — here's how to get your savings back on track
Mortgage rates are the highest they’ve been in 20 years. Should you still consider buying a rental property?
Find out why 61% of Americans fear running out of money more than death: Learn this one trick to conquer retirement anxiety now
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
