Lazy Man and Money

When To Buy and Sell Real Estate

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Quite a few years ago, I wrote an article, How We KNOW Where the Stock Market Will Go. That was a bold claim because everyone says they don’t have a crystal ball. No one knows when some world event (COVID, Russia going after Ukraine) will send markets crazy.

In that article, the key point that I made was that something called the Shiller PE (often also referred to as CAPE) indicates the stock market value. When this number is high, there’s an increased chance of a crash. Any number above 30 nowadays is a warning sign to me. When it reached around 40 last November, I wrote, Is now the time to sell stocks.

That was the top of the market. I don’t believe in jumping in and out of the market, but I did sell some stocks and buy some bonds. The idea is to be fully invested in the market but lower risk a bit. It’s worked out well, and now I’m starting to sell some of those bonds and buy stocks are lower prices.

But what about predicting when to buy real estate?

The Shiller PE number doesn’t work for the real estate markets. Instead, I’ve been using my gut. Prices felt very high when Zillow said our home was worth 25% more in a year. When we bought the house in 2011, prices seemed very low – far below what they were in 2006 and 2007.

I don’t want you emailing me asking how my gut feels about real estate. My gut isn’t going to help you.

I’ve got something better than my gut to share with you. I’ve got a metric like Shiller PE.

It’s called the NAHB/Wells Fargo score. When I heard that this existed, I decided to give it a look to see how useful this tool was in predicting whether the real estate market was high or low. This would be a terrible article if I told you that I couldn’t find much use for it. Fortunately, you are not reading a terrible article (for that reason at least). The NAHB/Wells Fargo index seems to be a great predictor of when real estate markets are high or low.

Here’s a graph:

When to Buy and Sell Real Estate
When to Buy and Sell Real Estate

Do you see how the index got higher throughout 2000 until the crash in 2008? The 3-4 years of that crash were a great time to buy real estate. We purchased our forever house in 2011. It cost half of what it would cost recently. We also purchased an investment property in 2012 for $95,000 that we recently sold for $205,000. We used that money to buy another property, which is now worth around $300,000. In ten years, we turned a $25,000 down payment into over $200,000 in equity.

How do we get the data in the graph? The NAHB/Wells Fargo score methodology is a little complex:

The NAHB/Wells Fargo HMI is a weighted average of three separate component indices: Present Single-Family Sales, Single-Family Sales for the Next Six Months, and Traffic of Prospective Buyers. Each month, a panel of builders rates the first two on a scale of “good,” “fair” or “poor” and the last on a scale of “high to very high,” “average” or “low to very low”. An index is calculated for each series by applying the formula “(good – poor + 100)/2” or, for Traffic, “(high/very high – low/very low + 100)/2”.

Each resulting index is first seasonally adjusted, then weighted to produce the HMI. The weights are .5920 for Present Sales, .1358 for Sales for the Next Six Months, and .2722 for Traffic. The weights were chosen to maximize the correlation with starts through the following six months.

As you can see, right now we’re in the middle. Interest rates have gone up and the high prices have started to come down. If you were looking to buy a home to live in, this is probably a fine time to do that. If you were looking to buy at a low price and sell at a higher price later, I would probably wait a bit. If the index gets to around 25, I’ll be looking to see if I can find real estate bargains.

Think Locally

While I linked to the national numbers (since I write to a national audience), your area of the country may be different. Fortunately, that information is available too. You need to search around the site a bit, but you can find the region for Mansfield, TX is a little cheaper than the rest of the country. Knowing that you can reach out to the number one site for houses for sale Mansfield, TX and try to get a good deal on a home.

Last Edited: 3/2/2023

We Sold a Condo. Here’s the Investment Plan.

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Sometimes I think this blog is too often a reflection of my money journey. I should focus on things that other people can relate to more. However, that will have to wait for another day. Remember a couple of months ago when I wrote We’re Selling a Condo!

Well…

WE SOLD A CONDO

Ever had a day where there are a couple hundred thousand dollars changed hands? That’s what we had last week. I have to write about a big financial move like that, right?

We had sold a condo a couple of years ago, but we did a 1031 exchange and bought a new investment property. A 1031 exchange is a tax code sale where we avoid paying taxes because the money is going to a new property. We had decided to get out of landlording in Massachusetts – it’s easier to be a landlord in Rhode Island.

I initially thought of doing a 1031 exchange again, but my wife changed my mind. She usually doesn’t weigh in on the financial decisions, but I’m so happy she did. We had an opportunity to sell at the market highs. It was rare timing that the tenant’s lease had ended in the window where prices were high, and everyone was trying to buy because they wanted to lock in a low mortgage.

If we wanted to do a 1031 exchange, it meant buying at market highs. That’s not something that makes me comfortable. Why not cash out, pay the taxes, and see where life takes us for a bit? Perhaps there will be a crash like in 2010, and we’ll buy in low. If not, that’s okay too.

For years we’ve lived almost paycheck-to-paycheck. We were saving money but in retirement accounts. A small part of our income went into the investment properties because they had 15-year mortgages, and the rents weren’t covering expenses. All of this was great for our net worth, but at the end of the month, I’d look and see that we had 90% of our money in retirement and real estate accounts – not very liquid. In fact, among other investments, only about 3% of our money was liquid. It can be dangerous not to have enough liquid cash, but my wife’s government job is relatively secure, and all my income streams are diverse enough to withstand a lot.

Suddenly we have a couple of years of expenses in cash. Finally, we have a true emergency fund.

Where Do We Go From Here?

Having that cash is great, but my wife and I are afraid of spending it. After we pay off the taxes, we’ll invest the money. I hope that the investments throw off enough cash to supplement what we make from our jobs. Perhaps we reinvest that money. Perhaps we use it for fun. Perhaps it goes into home improvements or something like that.

I wasn’t sure how to invest this, so I went back through my archives and found my income investing article. There are some good ideas in that article, but this is how I am planning to invest the money:

Income$250,000
InvestmentPercentageYieldTotal
VYM (High Dividend)25%3.04%$1,900.00
VNQ (REIT)25%3.00%$1,875.00
BND (Bonds)25%3.32%$2,075.00
VTI (Total Market Index)25%1.56%$975.00
Annual100%2.73%$6,825.00
Monthly$568.75

These are all Vanguard ETFs. We have enough money to get Admiral shares of the mutual funds, but I’m more comfortable with the ETFs. From what I read, it doesn’t seem like it would make a big difference. If you think otherwise, please let me know in the comments.

The dollar amounts are a reasonable sample. I’m not sure if we’ll have $250,000 exactly, but I found it helpful to put in an estimate. We have to pay some taxes, but we also have some existing money to contribute to this.

We’ve got two goals that we’re working on:

  1. Preserve the Money

    The hope is that these asset classes are diverse enough to do well in a recession. Here’s how they did in the 2009 crash:
    VYM dropped about 50%
    VNQ dropped about 66%
    BND dropped about 10%
    VTI dropped about 40%

    In total, they combined to drop 40%. That’s… not great. That recession hit real estate and banks hard. Banks usually pay good dividends, so it’s understandable why VYM was hurt badly. In some down markets, like the 20% drop in the broad indexes this year, VYM has done well. Bonds haven’t done well in this environment, but they are only down about 12% compared to those broad markets.

    Since the markets are already down, hopefully, we won’t see anything like 2009. If we do, we’ll try not to sell anything until it recovers. We’ll also try to reinvest at those lower prices.

  2. Getting a Check
    Most of these pay dividends every three months, so the “monthly” number in the chart above isn’t accurate. However, it’s an average. We’ll get more money in some months and less money in others. After the first few months, we’ll have cash in there that we can start to use.

    It’s disappointing that we wouldn’t even get $7,000 in cash. However, the ETFs prices have also gone up over time. There’s a lot more value than just the dividends.

I was curious to see how this portfolio of investments would perform over an extended period. However, I didn’t know of a good tool to help me model and backtest it. Fortunately, the awesome Mike Piper had an answer – the just-as-awesome PortfolioVisualizer.com.

Here’s what it looks like:

(Click for larger version in a new tab.)

I could only model this portfolio back to 2008, as not all these ETFs were around before that. Looking at the bottom of the image, it seems this portfolio has returned 7.60% since the start of 2008. So with a $250,000 portfolio, I could expect average returns of $19,000 per year. I’d have to sell a few shares, but that’s the kind of return that I’m happy with, especially while I try to reduce risk.

I’m still exploring this Portfolio Performance tool and coming across some great information. For example, they publish the maximum negative periods so that you can get an idea of the worst-case scenario (historically):

As you can see, the worst it did was that 40% I estimated above. After that, there was a brief period when COVID first started spreading, and there are the last six months where inflation has been high. That’s not too many downturns of 10%, and that’s still very safe. To put it another way, if it had an average year of making 7.6%, we would be in the positive almost always after that first year.

We’re Selling a Condo!

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About a month ago, I wrote how our real estate empire was built. Now, I’m here to say that it’s going to be out of date very soon.

We’re selling the second property that I mentioned. It’s a 2 bed, 2 bath townhouse about a half-hour west of Boston. I had paid $278,000 for it in 2005 only to watch it climb for 18 months… and then fall dramatically to $178,000 (according to Zillow) in the 2009 crash. Now, 17 years later, I’ve accepted an offer of $385,000. There is a big difference between accepting an offer and having the process completed. For this article, let’s assume that everything goes according to plan.

That $100,000 gain turns out to be about 2% appreciation a year. I guess that’s the power of leverage. Refinancing the mortgage to 15-years helped us pay down the loan a lot. The end result is that we’ll have $300,000 after we pay the bank. From that $300,000 we’ll have to pay the realtor, lawyers, taxes, depreciation recapture, butcher, baker, and candlestick maker fees. I can’t do all the math to figure out what we’ll have left, but I think it will be more than $225,000.

Liquidity, Sweet Liquidity

Our net worth would lead most people to think we are rich. For years, I’ve written that we don’t feel like it. It’s the typical, millionaire next door story. For the last 15+ years, we’ve been doing our best to max out our retirement savings. We also have four mortgages at 15-year-fixed rates – three of them being rental properties. As a result, our net worth is 90% real estate and retirement savings – stuff that’s hard to get at. A large portion of the rest is in cars, 529 plans, and private equity – also hard to access. Overall, we have only about 4% of our net worth in cash that we can access. Even that cash is scattered in business accounts such as this blog or the real estate LLC.

In a lot of ways, we live paycheck to paycheck. However, we do so knowing that we can do several things to get some cash if necessary.

In January, I wrote that we were planning our first non-retirement asset allocation. We hadn’t decided on selling this property at the time, but we can use this to guide our investments. It’s almost like starting all over with saving and investing. It will be exciting to have all this cash available. I’m hoping that we can invest it conservatively and make 6% a year. Maybe we’ll be able to count on $15,000. We’ll try to reinvest as much as possible, but my wife is thinking of military retirement soon, so $15,000 in income plus her pension will help cover expenses until the rest of our mortgages are paid off.

The Power of Forced Savings

The most overlooked advantage of real estate investment is forced savings. You have to pay that mortgage every month. Most of the months it went smoothly because we had a tenant in place. Some months haven’t gone as smoothly. We rolled with the punches when there have been condo assessments or when the HOA fee has gone up.

There were certainly times when paying these expenses wasn’t easy. If we had a choice we would have skipped those months. Then we might have said, “Well the world didn’t fall apart, so maybe we can skip another month and use the money for a well-deserved treat.”

It really works great. I recommend that you give it a try if you can.

However, all that’s going away now. As my wife recently said, “We’re going to have to put this money somewhere. I’m afraid I’m going to spend this money on jet skis.” (“Jet skis” is our little code for a large, unnecessary expense that will probably sit around not being used.) I told her that I’m on it and I have a plan (well, at least part of the plan).

We thought about doing a 1031 exchange as we did with another property about 18 months ago. However, it seems to be the wrong time to buy into the market if you don’t have to. It feels like the housing bubble in the mid-2000s when we bought this property. I’d much rather invest in stocks and bonds and wait for another buying opportunity like in 2011. I feel that it will come in the next 3-5 years, but if it doesn’t, that’s fine too.

What are some ways that you’ve forced yourself to save money over the years? I can really use the tips. Leave me a message in the comments.

How our Real Estate Empire Was Built

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It’s been a long time since I’ve written about our real estate “empire”. (I put “empire” in quotes because it is tiny – only 3 properties). I wrote that article back in 2013. Wow! Time flies.

That’s far too long without an update. Now is as good a time as any. Actually, it’s a better time than any because I’ve been doing taxes. I have a lot more data to share. I’ll update this information annually and we’ll see how it progresses. It’s not too exciting to do this kind of overview every few months – things don’t change that much.

Introducing our Rental Properties

To make distinguishing the properties easier, I’ve decided to give them names. I could just name them A, B, and C, but that’s boring. To make it a bit fun, I’d settled on the Pokemon Kanto starters. (Don’t worry, you won’t be tested. I didn’t know what a Pokemon was four years ago.) All the properties are two-bedroom, two-bath condos, but their locations are different. Because they are condos, they have many comparables on the market, so Zillow’s Zestimate is generally very accurate.

Acquisition of the Properties

Property #1 – Bulbasaur

Purchase Date: 2002
Original Cost: $140,000
Current Value: $217,700
Mortgage Left: $49,074
Rented at: $1375 (Zillow Zestimate: $1,829)

My wife bought this property before I met her. It’s an hour west of Boston. It was perfect for her as it was near her work. She didn’t have the 20% down. When we were dating in 2004 and 2005 she was still paying off the private mortgage insurance (PMI).

It became a rental property in the fall of 2006 when my wife and I moved to San Francisco for her job.

Property #2 – Charmander

Purchase Date: 2005
Original Cost: $278,000
Current Value: $378,700
Mortgage Left: $86,246
Rented at: $1900 (Zillow Zestimate: $2,377)

I had been living with a friend for several years. We got a place with his wife for a bit, but I obviously needed to move on. It worked out well as I had started to date my future wife. My company moved about a half-hour west of Boston – which happened to be halfway to my wife’s Bulbasaur condo. I decided to buy there (we were still dating). Prices were really getting very expensive at the time, and there was a fear that we’d never be able to buy a home again. After a long search and pulling strings, I was able to nab an awesome interest rate of 5.875%.

It became a rental property at the same time as the Bulbasaur property.

Property #3 – Squirtle

Purchase Date: 2013
Original Cost: $95,000
Sold: $170,000 (2020)
Current Value: $215,900 (included for fun)
Mortgage Left: $0 (Sold)

We bought this property because it was such a great value. It was in the same condo complex as Bulbasaur and of a similar size but in better condition. I found this, but my wife wasn’t thrilled as we just had a newborn. However, I think I had a winning argument. If she liked buying her place for $140,000 in 2002, why not buy one in better condition for $95,000 ten years later.

When we sold this property, we did a 1031 exchange to buy the next property – 3b. Squirtle evolved into Wartortle.

Property #3b – Wartortle

Purchase Date: 2020
Original Cost: $204,000
Current Value: $303,000
Mortgage Left: $92,088
Rented at: $1600 (Zillow Zestimate: $2,499)

We had $115,000 of equity after selling Squirtle. We had about a $95,000 mortgage in 2020. It’s now about $92,000. This worked out better than we could have ever imagined. The Bulbasaur property went from 140K to 217K. The copycat property we bought in 2012 for 95K is now worth 303K (after the change of location). We have 30K extra in equity and we didn’t spend an extra 10 years paying down the mortgage.

Property #i – Pikachu

The house we live in now was originally bought as a real estate investment. We loved the cheap prices in 2011 and thought that we might retire in Newport (RI) someday. We rented it for one year and then my wife was able to get a job transfer back here. It’s appreciated most of all the properties, but I can’t count it since we need to live in it. That’s why I gave it the imaginary number “i”.

A Brief Timeline of our Rental Properties

Becoming an Accidental Landlord in 2006

We became accidental landlords in 2006. My fiancee/wife’s move was sudden. Her job opportunity had a narrow window. It would have been tough to sell both our condos (Bulbasaur and Charmander) while trying to move our lives across the country. We decided it was best to try to rent them out. Once the great recession came, we were locked into that decision because they were so far underwater. Charmander got to about $178,000 – $100K less than what I bought it for. Interestingly, it is now at $378,000, $100k more than what we bought it for.

The Double HARP of 2012

Do you remember the Home Affordable Refinance Program (HARP)? We were able to refinance Bulbasaur and Charmander in 2012 to interest rates of around 3.5%. We had that timed perfectly – it’s amazing to get a 3.5% mortgage on investment properties. We didn’t want to “start over” with another 30-year fixed mortgage, so we went with 15-year mortgages. Now that it’s ten years later, we have five years of mortgage payments left. With the low-interest rate, we’re not in any hurry to pay them off.

The 1031 Exchange of 2020

I covered the 1031 exchange of selling Squirtle and buying Wartortle above. The math on the last 9 years of the purchase is fairly amazing. We put $23K down and now have $211,000 in equity. That’s nearly a 9x gain in 9 years. Of course, a lot of that is due to the recent run-up, but even our similar Bulbasaur property didn’t perform like that.

What About Cashflow?

I don’t track cash flow as well as I should. It’s simply very difficult. It wasn’t until the last couple of years that we segregated them into their bank accounts. That was my wife’s idea because she wanted to see how much maintaining these places was costing us. It was a great idea and something we should have done long before.

Bulbasaur mostly breaks even. The 15-year mortgage means a higher payment. The property has had to do a complete overhaul that meant taking an additional loan for tens of thousands of dollars. Condo fees just keep going up.

Charmander loses about $500 a month. That’s way too much. Like Bulbasaur, there have been big property fixes with high bills. They had some fires recently and the insurance shot through the roof. Again the condo fees are high.

Squirtle and Wartortle are also the only two properties where we’ve consistently made some cash flow. However, Wartortle has cost a lot in maintenance over the last year. It was much closer to breaking even than it should be given the low mortgage payment and the rent. Recently the condo association changed the by-laws so that they don’t have the responsibility for the water pipes inside the walls. They keep failing and it’s costing the condo association too much money. We’ve been getting calls every 6 weeks about problems with the pipes, so this new law may be started just because of our unit. I’m not sure what to do, but it sounds like it might not be legal to me. We were on vacation when they sent the email, so we have to look into it now.

About Those Rents

The rents are way less than what they should be.

Bulbasaur had been at $1500 for a long time and we love the tenant, so we had been sticking at $1375. The market has moved a lot, but I don’t know if the Zillow Rental Zestimate is accurate. We’ll look to raise the rent, we’re going to need to if we are to cover renovations.

We’re going to look into selling Charmander and do another 1031 exchange. We’d rather manage a property that is closer to us in Rhode Island. Going 90 minutes to Massachusetts is a pain. It’s the perfect time to sell, but then buying is difficult and mortgage rates are sky-high now. Maybe we should sell, pay all the taxes and wait for a crash before getting back into the market?

The Zillow Zestimate of Wartortle of $2499 doesn’t seem right. It seems to have been stuck on that number for a long time. I think Zillow doesn’t really know and it is just putting a number out there with a link to a real estate agent for a finder’s fee. In any case, we should realistically be able to get $1900 a month. We need to start working our way there if it continues to have maintenance problems.

If we were able to rent all the property at Zillow Zestimates, we’d have an income of $6,705/mo., but we are only getting $4,875. That’s leaving more than $1800 a month on the table or $22,000 a year. Again, realistically the Zillow numbers are off, but we should be able to manage $10,000 more a year.

Cash flow of 2021

I almost forgot about the main reason why I started writing this article. We have the cash flow numbers from doing our taxes recently.

Bulbasaur’s income was $16,500 and expenses were $10,441. We made a little over $6,000 in cash flow! We were also lucky that we paid zero dollars in maintenance.

Charmander’s income was $22,800 and expenses were $15,483. We made $7,316 in cash flow! This was better than I thought. We only had $1,012 in maintenance.

Wartortle’s income was $16,355 and expenses were $15,142. We only made $1,200 in cash flow. The $5,200 in maintenance costs sunk us.

We did quite well earning $14,588 in cash flow in 2021. Wartortle’s maintenance problems were tough, but I guess it balances with the good fortune of the other properties. If we can raise rents to reasonable market rates, we should be able to get to $25,000 in rental income a year. That’s way better than I thought we’d be while we still have mortgage payments.

Three Top REITs For Passive Income

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I’m on vacation this week. Today, Josh Arnold of Sure Dividend is filling in for me with some insight on REITs and passive income. I’ll be back later this week with an article of my own.

For many, achieving sustainable passive income is the goal after a lifetime of saving and investing. After all, the measure of when one can stop working is often when their passive income can substitute for earned income. That makes it critical that investors are able to save and invest, but when the time comes to generate passive income, it is also critical to choose the right stocks for the highest chance of success.

Real Estate Investment Trusts, or REITs, are a group of stocks that either own physical property that is leased out, or financial instruments related to physical property, such as mortgage-backed securities. REITs exist mostly as pass-through vehicles where most of the earnings of the trust are distributed to shareholders, so dividend yields tend to be quite high for the sector. That is why they are so attractive as income, and why we like them for producing passive income.

In this article, we will examine 3 top REITs that offer investors safe, passive income.

Realty Income Corporation (O)

Our first stock is Realty Income, which bills itself as the Monthly Dividend Company. Realty is so named because it’s famous for having paid common stock monthly dividends throughout the past fifty years, an astounding feat. Realty Income sets itself apart from traditional stocks that pay quarterly dividends, because monthly dividends not only allow for faster compounding, but for those using dividends for income, monthly provides regular inflows rather than large lumps of dividends every three months. For passive income generation, monthly is far superior.

Realty Income owns more than 6,500 properties that it leases under long-term agreements to commercial clients. The trust focuses on standalone retail properties, not malls or shopping centers, as it has proven during its 50+ years of operating that it can generate superior returns via this strategy.

Realty Income has boosted its dividend more than 100 times since going public in 1994, as the trust tends to opt for a few, incremental boosts of the payout during the year, rather than one large increase annually. Realty Income has scale as well, generating more than $3 billion in annual revenue, and trading for a market capitalization of $40 billion.

Apart from paying the dividend monthly instead of quarterly, we like Realty Income for its current yield, its safe payout, and its dividend growth potential. The current yield is 4.4%, which is more than triple that of the S&P 500, so on a pure income basis, Realty Income checks the box. That’s even more so the case when you consider it’s paid monthly rather than quarterly. In addition, Realty Income has raised its dividend for 26 consecutive years.

Realty Income’s payout ratio is also quite reasonable, coming in at just 75% for this year. As REITs are required to pay out substantially all of their earnings as dividends, payout ratios in the sector tend to be quite high. Given that, we see Realty Income’s payout ratio as quite sustainable, and with good room for future growth. We forecast 4% annual growth in FFO-per-share and similar gains in the dividend as a result.

STAG Industrial, Inc. (STAG)

Our next stock is STAG Industrial, a REIT that is focused on the acquisition and operation of single-tenant industrial properties in the US. The trust targets properties that have wide moats by focusing on industrial properties that support e-commerce businesses, for instance. This strategy has generated a strong mix of income and growth for STAG’s history as a public company, and we believe it to be well-positioned for years to come through this strategy.

STAG produces about $650 million in annual revenue and trades with a market capitalization of $7.2 billion. The trust sports an 11-year dividend increase streak, as it has raised its dividend every year since going public.

STAG’s payout ratio is outstanding for a REIT, coming in at just 66% for this year. That leaves ample room for both safety and dividend increases, consistent with the trust’s past. The yield is also robust at 3.7%, about triple that of the broader market, and like Realty Income, it is paid monthly rather than quarterly.

We project 5% annual FFO-per-share growth for STAG, providing long-term dividend increase potential that is stronger than most REITs, which tend to be low-growth stocks.

Essex Property Trust, Inc. (ESS)

Our final stock is Essex Property Trust, a REIT that focuses on acquiring, developing, and managing multifamily residential properties in the West Coast markets of the US. The trust focuses on high-quality apartment communities it believes are in areas with strong growth, and currently owns about 250 different communities consisting of about 60,000 units.

Essex generates $1.5 billion in annual revenue and trades with a $23 billion market capitalization, so it is also quite sizable.

Essex has boosted its dividend for 27 years consecutively, making it a very strong income stock. It pays its dividends quarterly, and the current yield is 2.6%, about double that of the S&P 500. However, we like Essex because it owns properties in desirable markets with favorable long-term demographic trends and a very safe dividend.

The payout ratio for this year is expected to be just 60%, making Essex’s dividend safety top-tier among REITs. The trust has produced strong growth for most of its operating history, and we think that will continue in the years to come, particularly as the current housing market makes it less affordable to buy a home. That leads to rent price growth for Essex and other apartment owners.

We see 1.5% FFO-per-share growth as our base case, with upside potential depending upon housing market price growth.

Final Thoughts

While there are many ways to generate passive income in retirement, we find REITs to be a very attractive choice. Two of the stocks we’ve looked at here offer monthly dividends, rather than quarterly, providing shareholders more frequent income. In addition, they all offer market-beating yields and very strong dividend safety prospects. Finally, all three have good track records of raising their dividends, even during recessions, so overall, Realty, STAG, and Essex offer investors a great mix of yield, safety, and growth potential for passive income.