Reaching a level of financial independence with real estate investing is not that hard. However, one of the best ways to achieve this is passive income. Stick around to find out the many ways to make passive income in real estate.
Before we talk about the many ways to make passive income, you should know what is passive income.
What is Passive Income?
To put it simply, passive income is one that is generated when the real estate investor is not involved. In other words, a real estate investor only puts his money towards a real estate property that another party manages.
For example, if you are a house investor, and you have a rental property that is managed by a property manager who takes care of everything while you only put money towards the property, that is a passive investment. Moreover, the money you get is passive income.
Related: Are You Ready to Become a Real Estate Investor?
Reasons to Make Passive Income
#1. Less Time Commitment
Nothing is better than having some extra time to spend with the family or even traveling without worrying about your paycheck. In fact, this is the very reason many people prefer to go with passive investing. As you invest your money in a real estate property without having to put forth any effort, you will be able to engage in other activities of your choice. Therefore, it makes passive real estate investing the best way to achieve financial independence.
#2. Less Stress Over the Future
The future! It’s been everybody’s concern from the beginning of time. It’s like people have stopped living in the now, thinking how to secure their future. Moreover, it’s become a bigger concern after the recession when many employees suffered from downsizing. However, those who chose to invest in real estate passively were the ones to suffer the least. So, why not take the path of passive real estate investing after all?!
#3. You Can Make a Living and Still Live Your Life
Really, we all have our careers and that 9-5 job that consumes most of our daytime. We wish to have more time to live and do whatever we wish to do but we can’t because of that job. Well, with passive real estate investing, you are the one to decide what to do with that time. You get to spend that time engaging in your own personal preferences in life. All you have to do is put your money out there and the rest is up to professionals to run the business.
#4. You Can Work Anyway and Anywhere
The best feature of passive income is that you can make it however you wish to. Not only that but you can also choose to work from anywhere. Ever thought of sitting at your favorite coffee shop and having a cup of coffee while working on your laptop or even keeping up with your real estate investments? It feels great, we must say! Investing in real estate for passive income provides you with the freedom of choice. So, again, why not go with that option when it’s available!
#5. Financial Growth and Stability
This might be the point where everybody agrees to the same idea; we all want to keep growing financially. We also want to have that stability of income. That is exactly what you get when you are investing in real estate passively. Receiving a passive income means that you will have the time to engage in other investments as well as growing your investing portfolio.
How to Create Passive Income in Real Estate Investing
In real estate, there are many ways through which you can make passive income. There is a variety of investment strategies that allow a real estate investor to invest passively. Here are a few ways for how to make passive income through real estate:
REITs
Real Estate Investment Trusts are companies that pool resources from investors and put them into large-scale investments. So, when you invest your money in such companies, you do not have any responsibilities of any type of management. Therefore, you enjoy your 9-5 job and above that collect the profits of the project without any effort.
Related: 4 Simple Ways to Invest in Real Estate Without Buying Investment Property
Turnkey Real Estate Investing
Turnkey properties are very popular in real estate investing, especially for those who wish to make passive income. They are a type of passive income properties. Essentially, you purchase a rental property from a company that already has someone managing it. Sometimes, this property already has tenants, so you basically acquire the ownership of that property as is. This investment strategy is best for beginner real estate investors as it is already taken care of and does not require much from the investor. Moreover, it allows the real estate investor to have his/her own career while investing on the side.
Passive Investing in Rental Properties by Hiring a Property Manager
Many real estate investors prefer to buy properties for the sake of renting them out. Therefore, what they do is hire investment property management to take care of all the daily tasks while they only stay in touch with the property manager. This way they can ensure that they are making money from income properties while they only receive reports from their property manager.
Real Estate Syndication
Real estate syndication is a way of pooling financial resources and investing them in larger-scale projects. So, basically, there are two parties: the real estate syndicator and the other investors. A real estate syndicator is the one responsible for gathering the resources and finding the best real estate investments. On the other hand, the real estate investors only provide the funds for the investment.
The part that makes it a great way of receiving a passive income from property is that you, as the real estate investor, do not get involved. The administrative part is in the hands of the real estate syndicator who acts as the property manager.
Real Estate Investing Groups
Real estate investing groups are a great way for making a real estate passive income. Simply, you get a real estate property that is already rented out and has the group acting as the property manager in return for a portion of the rental income. So, instead of buying a property and advertising to find tenants, you will already have the property with its tenants. All you have to do is pay the group a part of your rental income.
Real Estate Partnership
If you are still wondering how to make passive income from real estate, then invest with a partner. All you have got to do is find someone with the level of expertise you want and fund the business. They will be the ones to take care of the management part as you enjoy your share of the cash flow. This strategy is best, especially when you do not have the knowledge or the experience in the field.
Related: Where and How to Find a Business Partner for Your Real Estate Investing Business
Real Estate Crowdfunding
Real estate crowdfunding is another approach to pooling resources online. Through real estate platforms, real estate syndicators and real estate developers reach out to investors wishing to be making money in real estate without getting involved. Therefore, you can find real estate platforms that complement your financial circumstances and enjoy the best passive income investments.
Check out Mashvisor to learn all about making a passive income in real estate.