You might have heard that in order to become one of the most successful real estate investors you should work hard. It is partly true. Haven’t you ever wondered how to start making money in real estate with minimum efforts? The answer is through dealing with passive income investments. There are arguments between real estate investors that passive income properties do not exist. However, those are just the rumors. So, what are passive income investments and how can you find them? Interested to be introduced to the passive income investments, keep on reading!
#1 What Are Passive Income Investments and Active Income Properties?
Let’s explore what are the active and passive income investments first. This is important to understand before we rush in with the explanation of how to find passive income investments.
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Passive Income Investments
Passive income investments are basically rental properties that generate passive rental income. Usually, passive rental income is the money that a real estate investor makes without putting in a lot of effort. In other words, passive income investments are the investment properties that are being managed as well as monitored by a third party (professional property management company), while a real estate investor sits back and receives his/her rental income.
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Active Real Estate Investing
Active real estate investing is absolutely opposite to the passive way of making money in real estate. What does active real estate investing mean? Basically, a real estate investor is the one who manages and micromanages the whole process. Everything starts with selecting the best income generating assets and ending with the management of a particular income property. Active real estate investing is not for everyone as you need to have good knowledge about real estate investments as well as know how to invest in real estate.
#2 How to Find Passive Income Investments
Since you already know what passive income investments are, now it is the time to find out about the various ways of selecting the best passive income investments.
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Finding Passive Real Estate Investments: Partnerships
Real estate partnership is seen as one of the most secure ways of making money in real estate, as there are two or more real estate investors involved. Consequently, real estate investors split the risk associated with investing. However, is the real estate partnership a way to start passively making money in real estate? The answer is YES. When you have the money to invest in a rental property but do not want to invest your time or effort, finding a partner is the key. You split the tasks: you are the one who buys investment properties and your real estate investing partner is the one who chooses the best investment strategy and is in charge of managing the investment properties. Curious to learn more about real estate partnerships? Make sure to read “What You Need to Know about Real Estate Partnerships.”
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Finding Passive Real Estate Investments: Real Estate Companies
When mentioning real estate companies, the emphasis goes to a turnkey real estate investing strategy. Basically, turnkey real estate investing is a way of buying a rental property which has been renovated and repaired. Moreover, it might have tenants living there already. Furthermore, you would receive professional property management services from a turnkey company. What is your task? You select the best real estate investments, you buy a rental property and the rest you leave up to the professional property management company. In other words, this is considered investing in passive real estate investments.
#3 Best Investment Strategy: Generating Passive Income from Various Income Properties
Now you will find out what types of income properties can be turned into passive income investments.
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Single Family Homes
There is only one possible way of making single family homes a passive income investment. So how to make money in real estate passively? First of all, you should choose the best real estate investments in the right location. The most successful real estate investors are using tools like an Airbnb calculator to locate income-generating assets that are both in high demand and forecast great ROI from rental income. The next step is hiring a professional property management company. However, such services tend to be pricey for single family homes and charge approximately 10% of the rental income.
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Multi Family Homes
Multi family homes can be a great target when it comes to turning your investment properties into passive income investments. The investment property calculator again is an essential tool if you plan on owning a prosperous investment. With the help of professional property management, your multi family home can become a passive income property. However, this is not the only way. Another possibility of turning your property into a passive investment is with real estate syndication. Multi family real estate investment properties are more favorable for real estate syndication than other types of real estate. Curious to learn what real estate syndication is? Make sure to read “The Ultimate Guide to Real Estate Syndication.”
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Airbnb Rental Properties
It is also possible to turn your Airbnb rental property into a passive income investment. However, it will require more effort than simply using a rental property calculator and hiring a professional property management company. Delegation, as well as automation, is a key aspect of turning your Airbnb rental property into passive income investments. So what are the first things that have to be automated? Well, check-ins and check-outs, as well as bookings, should be your number one priority. You should be proactive, in order to find the best companies that offer software that will automate key procedures of Airbnb management. After you have ensured the software program, it is time to hire cleaning services and handyman services for routine maintenance. Interested to learn more about short term rental properties? Make sure to read “Real Estate Investment Strategies Guide: Short Term Rentals.”
As you can see, there is such a thing as passive income investments, even though you still need to put forth some effort…at least in the beginning!
To learn more about all aspects of income generating assets, continue reading our blog.