'This is just theft': California couple fall prey to serial squatters who refused to pay rent for months — 3 alternative ways to invest in real estate (without the trials of being a landlord)

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.

The Morairtys were stuck paying the mortgage on their investment property out of their own pockets, so they reached out to their real estate agent, Gary Meek, for help. Meek told ABC10 he’s had “hours of conversations with Karen — frustrated, upset, crying.”

He added: “Unfortunately, there are criminals out there that use amazing talent and education for bad.”

It’s an opinion backed up by property manager Barry Mathis, hired by the Sacramento couple 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 are three hassle-free ways you can invest in real estate.

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, for example, provides investors with broad exposure to U.S. REITs. The fund currently holds 163 stocks with total net assets of $59.9 billion. Over the past 10 years, VNQ’s net asset value (NAV) has grown 7.35%. Its management expense ratio is 0.12%.

You can also check out the Real Estate Select Sector SPDR Fund, 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 6.24%.

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.