To some real estate investors, the idea of passive income property investments is a pipedream. They claim that making money in real estate can only happen through active forms of investments. It is true that real estate investing is not a truly passive income endeavor. You’ll never see full-time real estate investors start a new investment while relaxing in a hammock. What is true, however, is that once an investor has put in the time and effort into some types of investments at the beginning of the deal, they can end up earning passive rental income in the long run. This is possible for part-time real estate investors and full-time real estate investors, regardless of investment strategies. So, what are these types of property investments? What are the best passive income investments?
1.) Real Estate Investment Trusts (REITs)
REITs are one of the best real estate investments for making passive rental income. These investment properties work for both long term investment strategies and short term investment strategies. REITs are companies that invest in income properties. They invest in various types of properties and are not limited to residential real estate investing.
All the part-time or full-time real estate investors have to do is invest in the purchase. The REIT itself will operate and manage the investment property. The investor then receives rental income from the property investments. Since the investor is free from landlord responsibilities, investing in REITs is one of the best passive income investments. The most work full-time or part-time real estate investors have to deal with is researching REITs and agreeing to terms. Aside from that, the investor is expected to earn high rental income and positive cash flow.
REITs are by far one of the best passive income investment strategies. To learn more about the best short term and long term investment strategies, read this: “Top Six Real Estate Investment Strategies”!
2.) Turn-key Investment Properties
Next up on our list of the best passive income investments are turn-key income properties. As the name implies, these are investment properties that are immediately ready to be rented out. Full-time or part-time real estate investors purchase the investment property from companies that specialize in restoring properties. The same companies usually provide a management service as well. Just like with REITs, turn-key investment properties are great sources of passive rental income and positive cash flow because management duties fall upon the company, not the investor. Turn-key income properties are also furnished before purchase which eases the burden of the investor. Again, similar to REITs, the investor will likely spend more time finding a property and company before the purchase than actually operating the property.
3.) Airbnb Income Properties
Not only are Airbnb properties some of the best real estate investments, they are also some of the best passive income investments. As a matter of fact, many Airbnb investors start out as passive part-time real estate investors, highlighting the ease this investment strategy provides. The investor has full control over many aspects of Airbnb real estate investing, most notably being the price set per stay. While Airbnb investors have full control over many aspects of investing, they are fully responsible for property management, except if they hire professional property management, of course. Regardless, Airbnb income properties are among the best passive income investments, especially for short term investment strategies.
Want to know where to find the best passive income investments for Airbnb? Find out by reading this blog: “These are the Best Cities for Airbnb Investment 2018”!
4.) Real Estate Crowdfunding
Making money in real estate, especially passive money, never has to be a one-man mission. Real estate investors could arrange deals online through real estate crowdfunding platforms. Crowdfunding gives investors a lot of control over their income properties. REITs, for comparison, choose the investment property without the input of investors. Investors also have a passive role when it comes to managerial duties when crowdfunding. Crowdfunding also has the edge over REITs and turn-keys when it comes to the amount required to invest. It’s the investors themselves, not companies, who decide on how to split the investment price. These factors make real estate crowdfunding one of the best passive income investments out there.
5.) Out of State Real Estate Investing
Even out of state real estate investing can act as a form of passive investment. Sometimes, investors find the best real estate investments out of their area. This can lead to high rental income and positive cash flow. The main problem with investing in out of state real estate is property management. Solving this problem is simple; hire professional property management. By doing this, out of state investing becomes passive, but with an obvious expense. In a way, this is the same as investing in turn-key properties, except that turn-keys are always furnished before purchase.
6.) Single-family and Multifamily Investment Properties
Common residential types of property investments such as single-family and multifamily rentals can also function as the best passive income investments. If you could mitigate property management through professional management or other help, your income could become passive.
Each type of property comes with special investment benefits. Both types yield high rental income, but multifamily properties generate more since they have more units. Single-family properties, however, tend to garner more attention from tenants.
Location greatly factors in the amount of rental income generated by single-family and multi-family properties. If you want to know where the best places to invest are, read this blog: “Best Places to Invest in Real Estate: 7 Cities with Highest Returns”!
The best passive income investments in real estate are turn-key properties, REITs, Airbnb rentals, real estate crowdfunding, out of state investing, and single and multifamily properties.
Want to learn about a few more passive real estate investment strategies? Watch the video below!