“Income producing assets” – even the name sounds good. That is because income producing assets ARE good. They are assets that, if you own, will generate an income for you. That definitely sounds better than working 8 hours a day in order to produce an income. So, what are the best types of income producing assets and the best ways to invest in them?
Here are some of the best income producing assets that come to mind in the real estate business:
Rental properties are among the best and most common income producing assets out there. Rental properties come in different shapes and sizes, with a number of investment strategies through which they can be utilized. Indeed, the very nature of rental properties is built around them being income producing assets.
So, what are the best types of rental properties when it comes to producing a passive income?
1. Single Family Homes
Purchasing an income property for the sole purpose of renting it out is what most newcomers to the real estate investing business choose to go for. Single family homes can be found at relatively lower price-tags than other rental properties. They are small, efficient, and straightforward. Depending on the property, you can either rent out single family homes for long-term or short-term rentals, giving you the options of either renting out traditionally or using Airbnb.
2. Owner-Occupied Rental Properties
This type of real estate investment is perfect for landlords looking to manage their own income producing assets. Owner-occupied properties are properties that can house the landlord in addition to 1 or more tenants in separate units or even in the same unit. This is a great option when it comes to income producing assets because you as a landlord will always be present at your rental property. This gives you more insight on what the property needs in order to become a more successful investment, and eliminates the need for hiring professional property management in most cases.
Additionally, owner-occupied rental properties allow the landlord to build a personal relationship with the tenants, which is a good technique for establishing a good reputation for your property (and yourself), raising its occupancy rate, and thus increasing your passive income.
3. Multi Family Rentals
Once you’re paved your way up the rank of real estate investors, it is time to move to bigger and more efficient income producing assets. These come in the shape of apartment buildings that include 5+ housing units. This means that you will be moving away from the domain of single family home investing and entering the dimension of multi family real estate property investments, where there is more money to be earned.
Related: Multi Family Real Estate Investing: Debunking the Myths
Once you’ve acquired enough knowledge and experience, you can start investing in apartment buildings or other multi family properties that are considered income producing assets. At this point, you will also probably need property management to help you manage your income producing assets, as your investment will be starting to grow larger than your grip.
Apartment buildings in particular, and if their location is good, can start to generate large sums of passive income for you. Condos could be another good choice when it comes to multi family properties, especially if the property is located in a good, prospering residential and commercial area.
REITs, Partnerships and Crowdfunding
Some of the best income producing assets in real estate investing can be found in the form of funds and partnerships. Although investing in some of these methods (REITs in particular) is more similar to investing in the stock market than in the real estate market, these are still great options when it comes to income producing assets.
Investing in Real Estate Investment Trusts (REITs) is very similar to investing in stocks. You contribute with a portion of your money, you gain partial ownership over the real estate property, and you make income as a shareholder in the form of dividends.
Related: What is a Real Estate Investment Trust (REIT)?
Additionally, REITs usually stick to one type of investment properties. A REIT could be specialized in office buildings or in building cellphone towers, for example. This gives you the option to study the market and determine the types of property with the highest potential for success and then find a REIT that is focusing on that type of property in its investments, which will give you access to great income producing assets through an investment trust.
2. Real Estate Investing Partnerships
Some of the best techniques for investing in income producing assets is through investment partnerships. An investment partnership allows you to join forces (or funds) with a real estate partner to invest in an income producing asset, providing you with the possibility to generate a passive income while spending less time and effort than you would by investing in an income producing asset on your own.
If you manage to find the right partner, you can start dividing the tasks between the two – or three or more – of you, leaving you with the tasks of your choice in exchange for a passive income that is split among the partners.
This also means that you might not need to hire professional property management, as the management of your rental property can be divided between you and your partner(s), giving each one of you less tasks and responsibilities while still maintaining a passive income.
3. Real Estate Crowdfunding
Crowdfunding allows you to do two things:
- It allows you to brag to your friends about having SOME ownership over a certain building, which could be a very large building with several people investing in it.
- And it allows you to generate passive income if your investment is a success.
This makes crowdfunded properties a great option for investing in income producing assets. It also gives you the opportunity to make an investment with a very small amount of money, ranging from $20,000 down to $100 in some cases. Look up some of the real estate crowdfunding projects in the area around you, and you might find your way to investing in income producing assets with the least amount of effort and money required.
Income producing assets are among the most attractive types of real estate investments, as they will give you the opportunity to start generating passive income, allowing you to achieve financial freedom and independence.
Related: 7 Major Benefits of Investing in Real Estate
You can find some of the best income producing assets, as well as everything you need to know to run your investment all in one place: Mashvisor. Mashvisor can help you locate the best investment opportunities in your city and neighborhood, as well as anywhere else in the US. It also allows you to make the best investment decisions based on data analysis and comparisons between thousands of real estate properties across the US, and in the specific area that you’re looking for. All this will help you choose the optimal strategy for investing in income producing assets.