With a net worth of $153 billion, Amazon.com Inc. Founder Jeff Bezos can probably afford to buy any house he wants. But right now, he’s renting.
Bezos and his fiancée Lauren Sanchez are reportedly renting a home in Malibu, California, from legendary jazz saxophonist Kenny G for $600,000 per month.
The 5,500-square-foot house comes with a huge backyard, pool, screening room and recording studio. It also has a 3,500-square-foot guesthouse.
The estate gives the couple access to Little Dume Beach, one of the most exclusive beaches in Malibu.
With the rent being over half a million dollars per month, you might expect the property to come fully furnished. But that’s not the case here: Kenny G’s items are in storage, and the house is adorned with Bezos and Sanchez’s own furniture.
Capitalizing On Rising Rents
According to the New York Post, Kenny G bought the six-bedroom house in 1998 for $12.5 million. The musician then purchased the adjacent lot in 2000 and built another 3,500-square-foot house. The construction cost him around $3 million.
Considering that the property is bringing in $600,000 in rent per month — that’s $7.2 million a year — it’s a pretty good investment by the musician.
For most Americans who rent, the monthly payment isn’t nearly as high as $600,000. But the amount has been on the rise.
According to the latest consumer price index (CPI) report, rent for a primary residence in the U.S. rose 8.7% in May from a year ago. Looking further back, you’ll see that rent for a primary residence has increased by nearly 60% since 2010.
This uptrend has created an increasing rental income stream for landlords.
But it’s not easy to be a landlord these days. Home prices are elevated, and rising interest rates mean buyers have to grapple with larger mortgage payments. And when you buy a house, you have to factor in more than the mortgage payments. Homeowners are also on the hook for property taxes, insurance, maintenance and repairs.
But these days, you don’t need to be a landlord to start collecting rental income. New companies — including one backed by Bezos — have innovated ways for people to earn passive income in the real estate market. Here’s how to invest in rental properties with as little as $100 while staying completely hands-off.
Publicly traded real estate investment trusts (REITs) that focus on residential could also be worth considering. Here’s a look at three that Wall Street finds attractive.
Mid-America Apartment Communities Inc. (NYSE:MAA): Mid-America Apartment Communities is a REIT primarily focused on apartment communities in the high-growth Sun Belt region of the U.S. At the end of the first quarter, it had an ownership interest in 101,986 apartment units, including communities currently under development. With a quarterly dividend rate of $1.40 per share, the REIT offers an annual yield of 3.6%. Goldman Sachs analyst Chandni Luthra has a Buy rating on Mid-America and a price target of $180. Because shares trade at $153.25 today, the price target implies a potential upside of 17%.
AvalonBay Communities Inc. (NYSE:AVB): AvalonBay Communities is an apartment REIT that focuses on metropolitan areas in regions it believes are characterized by growing employment in high-wage sectors and lower housing affordability. These regions include New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest and Northern and Southern California. The stock has surged 18% year to date, and Truist Securities analyst Michael Lewis sees more upside on the horizon. The analyst has a Buy rating on AvalonBay and a price target of $211 — around 11% above where the stock sits today. AvalonBay offers an annual dividend yield of 3.5%.
Camden Property Trust (NYSE:CPT): Camden Property Trust owns, manages, develops and acquires multifamily apartment communities. As of April 30, its portfolio consisted of 172 properties totaling 58,702 apartments. The REIT pays quarterly dividends of $1 per share, translating to an annual yield of 3.6%. Barclays analyst Anthony Powell has an Overweight rating on Camden and a price target of $137, implying a potential upside of 24%.
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This article Jeff Bezos Is Paying $600K A Month In Rent To This Famous Musician — Here’s How To Collect Rental Income Without Becoming A Landlord originally appeared on Benzinga.com
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