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Today: December 27, 2024

This Handyman Fought Back Against Squatters - Don't Do What He Did

SquattersSquatters
November 10, 2023
Soren Fallwell - LA Post

When handyman Flash Shelton found squatters occupying his elderly mother's California home, he hatched an unorthodox scheme to reclaim the property after police claimed they couldn't help. But while his hands-on tactic worked, experts strongly advise against taking such risks.

After the local sheriff's office said the squatters' furniture established residency rights, a tenacious Shelton assumed "squatter status" himself. By moving in and posting cameras, he forced the unwanted occupants to abandon his mom's house.

"I dissected the laws and figured out that until there's civil action, the squatters didn't have rights," Shelton told Fox Business. "So if I could switch places with them and become the squatter myself, I would assume those squatter rights."

Yet attempting to out-squat squatters poses real physical dangers and legal uncertainties. Shelton succeeded, but authorities caution against confrontations given squatters' unpredictable reactions. Despite his bravado, even Shelton admits, "I feel bad I can't help everyone."

To grasp the risks in Shelton's approach, it's important to understand the legal differences between squatters and trespassers.

Squatters inhabit properties without right or payment, gaining "adverse possession" rights if unchallenged for a period of time dictated by local laws. In some states, squatters can legally occupy a residence if the owner does not take action within as little as 7 days.

Trespassers, on the other hand, illegally enter a property through "forcible entry" and have no immediate rights. Police can promptly remove trespassers for violating loitering or trespassing statutes.

The line blurs once squatters meet adverse possession criteria in a given jurisdiction. At that point, they gain legal tenant status and formal eviction proceedings become necessary.

Given this evolution, experts warn self-help evictions nearly always create more problems than they solve:

  • Laws vary widely, making it difficult to discern when squatters gain defensible rights. Acting prematurely risks illegal eviction.
  • Confrontations can quickly turn violent when desperate squatters feel threatened. Evictors face grave bodily harm.
  • Improper evictions open the owner to civil liability and lawsuits which can lead to substantial damages.

While some praise Shelton's gumption, legal professionals universally advise hiring a lawyer once squatters establish occupancy. The mantra is: Never take the law into your own hands.

For those seeking real estate profits without the pitfalls of landlord headaches, several safer avenues exist:

REITs are companies that own and operate income-producing real estate including apartments, office towers, hotels, storage facilities, hospitals, shopping centers, and more.

To qualify as a REIT, a company must pay out at least 90% of its taxable income to shareholders annually in the form of dividends. In exchange, REITs pay little to no corporate income tax.

REITs provide liquid real estate exposure since they trade on major stock exchanges like publicly held companies. Investors can buy or sell shares anytime, and REIT share prices fluctuate with the real estate market.

Pros of REIT Investing:

  • Dividends derived from collected rents that typically exceed bond yields
  • Diversification across real estate sectors and geographic regions
  • Liquidity from exchange trading without locking up capital long-term
  • Potential for moderate capital appreciation over time
  • No down payment, mortgage, or direct property costs
  • Wide range of options from large diversified REITs to specialized plays

For further diversification and professional management, investors can buy shares in real estate exchange-traded funds (ETFs).

REIT ETFs own a basket of individual REIT stocks, providing instant exposure to hundreds of properties and real estate segments. They aim to track an index or utilize active stock picking.

Popular REIT ETFs include:

  • Vanguard Real Estate ETF (VNQ) - tracks the MSCI US REIT Index, owns 160+ REITs
  • Real Estate Select Sector SPDR Fund (XLRE) - mimics real estate sector performance of the S&P 500
  • Schwab US REIT ETF (SCHH) - owns 100+ US REITs, low 0.07% expense ratio

Minimum investments are usually the share price, often between $50-100. REIT ETFs provide low-cost participation in real estate markets big and small.

Real estate crowdfunding platforms allow investors to buy shares of individual properties including apartments, hotels, medical buildings, self-storage units, and more. Investors can participate for as little as $100 in some offerings.

By pooling small investments from many backers, crowdfunding opens opportunities historically only accessible to the wealthy. It has democratized real estate investing.

Participants earn rental income, profit-sharing upon sale, and tax benefits like depreciation without needing large capital reserves. Leading sites include Fundrise, CrowdStreet, and RealtyMogul.

Downsides include illiquidity, since there is no secondary market for shares. Investors must hold until the sponsor sells the asset, which may take years. Performing due diligence is critical before investing.

Newer platforms have also enabled investing in emerging digital real estate and virtual worlds. As "metaverse" projects expand, fractional digital land ownership may rise in appeal.

Whether via traded REITs, managed funds, or crowdfunding, ample channels now exist for profiting from real estate without the hassles of direct ownership. For most individual investors, diversified vehicles promise attractive risk-adjusted returns over the long haul.

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