For the Landlord Who Manages Three Rentals and Is Done: 3 ETFs That Pay You to Sell and Keep the Income
Selling three rentals sounds like freedom until you realize the income disappears with the keys. Three ETFs let landlords cash out of the properties without cashing out of real estate.
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You have painted enough hallways, chased enough late rent checks, and coordinated enough plumbers at 11 p.m. Three doors sounded manageable when you closed on the last one. Now it feels like a second job you never applied for. The good news: you can list the properties, cash out, and still collect rent checks, just through a brokerage account. Three ETFs do most of the heavy lifting: Schwab U.S. REIT ETF (NYSEARCA:SCHH), iShares Residential and Multisector Real Estate ETF (NYSEARCA:REZ), and Vanguard Global ex-U.S. Real Estate ETF (NASDAQ:VNQI).
Selling triggers real tax friction, including capital gains and depreciation recapture, so talk to a CPA before you list. What follows is how each fund fits the after-sale portfolio.
SCHH: Broad U.S. REIT Exposure Without the 2 A.M. Phone Calls
SCHH holds the biggest names in American commercial and residential real estate through one ticker. Top positions include Welltower at 9.6% of net assets, Prologis at 9.0%, Equinix at 4.9%, Simon Property Group at 4.5%, and American Tower at 4.3%. The portfolio spans apartments, single-family rentals, industrial and logistics, retail, self-storage, healthcare, data centers, office, hotels, timberland, and manufactured housing, so you swap concentration risk in three neighborhoods for exposure to hundreds of properties across the country.
For your rental replacement, note the direct residential holdings: Invitation Homes at 1.17%, AvalonBay Communities at 1.83%, Equity Residential at 1.59%, and American Homes 4 Rent at 0.74%. On income, SCHH pays quarterly, with a trailing 12-month distribution of $0.6607 and an annualized forward distribution of $0.6732 per share. Fund size sits at roughly $9.98 billion in net assets. Year to date, shares are up 15.62%, with a one-year return of 14.05% at a recent price of $23.85.
REZ: The Closest Public Match to Your Rental Portfolio
If SCHH is your diversified anchor, REZ is the fund that most resembles what you already own. It tilts toward residential landlords, senior housing operators, and self-storage, the kinds of tenants and buildings you understand. It carries a net expense ratio of 0.48%, meaning you keep roughly $9,952 of every $10,000 working for you each year.
The income shows up on a quarterly schedule with variable amounts. The latest distribution was $0.5065, the trailing 12-month total is $1.886, and the annualized forward figure is $2.026 per share. At a recent price of $94.90, REZ is up 15.47% year to date and 15.23% over the past year. Over the past decade, shares have returned 94.22% before dividends.
VNQI: Rent From Landlords You Will Never Meet
Your three properties are in one country, likely one city. VNQI fixes that. It holds real estate operators outside the United States, spreading your income across markets that do not move in lockstep with U.S. rates or U.S. housing policy.
VNQI pays once a year, and the checks are lumpy. The most recent distribution, paid December 23, 2025, was $2.1561 per share, up from $2.0404 the prior year. Longer term, annual payouts have swung widely, from $0.2353 in 2022 to $2.8949 in 2021. Total return has been modest recently, with shares down 0.68% year to date and up 0.83% over one year at a recent price of $45.53. You are buying geographic diversification, not momentum.
Trade-Offs to Weigh Before You List
Public REITs are not a clean swap for a rent check. Prices move daily with interest rates and equity markets, so the value of your income stream will bounce in ways a signed 12-month lease never did. Distributions vary quarter to quarter (especially for REZ and VNQI), and you lose the depreciation shield and 1031 optionality that direct ownership provides. Selling three rentals in a single tax year can also produce capital gains and depreciation recapture consequences worth mapping with a CPA before you sign a listing agreement.
The upside is that you keep the asset class, gain diversification across property types and geographies, and never touch a wrench again. The checks keep arriving without anyone selling shares to fund them, which is the whole idea behind a dividend ladder (we laid out how to build one in a free guide here: Never Touch the Principal).
Contact [email protected] for any questions or corrections.
Ryne Mauck is an investment writer covering exchange-traded funds, portfolio strategy, and opportunities across public markets. His investment approach emphasizes fundamental analysis, valuation, and disciplined risk-taking.
Through his work at 24/7 Wall St. and other investment platforms, including Seeking Alpha, he aims to provide readers with clear, research-driven insights into investment fundamentals, portfolio construction, and risk management. His goal is to help investors make more informed decisions while maintaining a disciplined long-term approach to investing.
Ryne holds a B.Sc. in Finance and an M.A. in Political Science.
