Investor Blogs The Best Income Producing Assets in Real Estate Investing by Nasser Mansur March 5, 2018February 6, 2019 by Nasser Mansur March 5, 2018February 6, 2019 What are the best income producing assets in real estate investing? Investing in real estate is one of the top sought out methods for making profits in our modern times. In fact, it is estimated that 90% of the wealthiest people in the US have built up their fortunes by investing in real estate. However, there are multiple ways that any real estate investor can make profits investing in real estate. Some real estate investors prefer investing in fixer uppers, for example, to make quick, short-term profits by flipping properties. Other real estate investors prefer investment opportunities that can generate an income to supplement or replace their full-time job salary. This is where income producing assets become relevant. In this article, we will briefly explain what income producing assets are, and what the different types of real estate properties available to any real estate investor who wants to increase their income or generate a passive income investing in real estate are. What are income producing assets? Income producing assets are real estate investment properties that will generate their profits in a periodic matter. This income that is produced from these real estate investments can be generated on a monthly, quarterly, annual, or sometimes even weekly and nightly basis. Additionally, investing in income producing assets can either be a passive income investment or an active income investment depending on your real estate investment strategy and the type of real estate investment that you want to make. Click here to find the best income producing assets in your neighborhood right now! So, let’s take a look at the different types of income producing assets in real estate investing. The types of income producing assets There are multiple types of income producing assets in real estate investing. Some of these real estate investments may be more profitable at the cost of requiring more time and effort to be invested in running and managing them, while others require very little effort on the part of the real estate investor but will generate less profits in return. Related: What are the Features of the Best Investment Property? The main and most popular types of income producing assets in real estate investing are the following: Long-term rental properties Long-term rental properties, also known as traditional rentals, are one of the oldest and most common types of real estate investments around the globe. It is also no secret that when it comes to income producing assets in real estate, rental properties in general can have the highest potential for profits and will generate some of the highest incomes. Long-term rental properties are very simple in how they function. You purchase an investment property and start renting it out to tenants in exchange for a monthly rent. This monthly rent will be your main source of income, and it is referred to as rental income. The rental income that you set on your rental property will be determined by you, the landlord, but should also be consistent with the real estate market and similar to other properties that share the same characteristics as your rental property. One of the main aspects of a rental property’s rental income is that in order for a rental property to generate profits, it must be occupied by tenants. To make sure that your rental property has what it takes to attract tenants to it, you as a landlord should make sure to allocate enough of your time to managing the property and tending to tenants. While some income producing assets in real estate are considered to be passive investments, rental properties are definitely not passive. Rental properties require the full attention of the landlord to keep the property in a good shape and to keep the tenants happy in their stay. However, once you’ve gained enough experience managing rental properties, the process will become much easier and you will improve at marketing your rental property and attracting tenants to it, allowing you to effectively increase your rental income to reach the high levels of profits that real estate investors seek. Related: How to Make the Most Money When Investing in Rental Property Short-term rental properties Similar to long-term rentals, short-term rental properties are investment properties that you purchase with the purpose of renting them out to tenants. The main difference between the two types of investment properties is that short-term rental properties are rented out to short-term tenants for periods that range between a single night or a few weeks. Short-term rental properties were made extremely popular in recent years by the emergence of Airbnb rentals. Click here to find the best performing Airbnb rentals to purchase in your market! Airbnb is a short-term rentals company that facilitates and manages short-term rentals around the globe, and it generally targets travelers and tourists who are looking for more affordable alternatives to hotels and for more private spaces to stay in during their travels. Airbnb rentals have quickly become one of the top income producing assets in real estate, and in many cities their rental income and profits can reach much higher levels than long-term rental properties. Additionally, similar to long-term rentals, Airbnb rentals require the same amount of time and effort for managing the property and tending to tenants. In fact, due to the frequency of tenant turnovers in Airbnb rentals, they typically require even more effort to manage them than long-term rentals. However, the biggest limitation to Airbnb rentals is their legal status in many cities around the world. Some cities and states have placed laws and regulations that can severely hinder the performance of Airbnb rentals and greatly reduce their potential for profits. So, before you purchase an investment property for the purpose of renting it out on Airbnb, make sure to check the laws and regulations of your city or state to make sure that this is a viable investment. Related: How Much Rental Income Should You Be Making? REITs and eREITs Lastly, we want to briefly mention REITs and eREITs as income producing assets in real estate investing. A REIT (Real Estate Investment Trust) is similar to a crowdfund that takes money from real estate investors and invests this money in real estate development projects for profit. REITs typically specialize in commercial real estate, such as office buildings or shopping malls, and real estate investors get to choose the types of investment properties that they want their money to be invested in. Once the investment property starts making profits, these profits will be distributed among the real estate investors who have put their money in it in the form of dividends. EREITs, on the other hand, are similar entities that utilize the same concept but apply it through online platforms. Some of the best eREITs available to real estate investors are online real estate investing websites like RealtyShares.com or Fundrise.com. Real estate investing websites like these are becoming very common, allowing real estate investors to make their investments from the comfort of their own homes and start generating a passive income. The biggest advantage of investing in REITs is that it is truly a passive income investment. As a real estate investor who puts his/her money in a REIT, you will not be required to engage in the investment or the management of the investment property, but you will earn an income from the property nonetheless. However, it should be noted that REITs, in general, generate less profits than rental properties. Related: How to Become a Real Estate Investor Using Mashvisor Bottom Line Investing in income producing assets in real estate can be a great choice for any real estate investor who is looking to increase his/her periodic income or to supplement his/her full-time job salary. However, you should always take into consideration the amount of time and effort that you’re willing to put in your investment and to find the balance between that and the amount of income that you’re looking to achieve. Are you looking for rental properties to invest in? Mashvisor can help you find the best performing rental properties, both long-term and Airbnb rentals, in the US based on projections and readings to help you understand the expected return on investment for each investment property before you commit to purchasing it! Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL Long-Term StrategyReal Estate WebsitesREITsRental IncomeShort-Term Strategy 0 FacebookTwitterGoogle +PinterestLinkedin Nasser Mansur Nasser is an experienced content writer with a degree in English Language and Literature. He loves writing about all aspects of the real estate investing business with focus on market and property analysis and the best sources which every real estate investor needs in order to succeed. Previous Post Is Real Estate a Good Investment for Early Retirement? Next Post The Best Property Investment Strategies for Beginners Related Posts What to Do When a Tenant Has a Late Rent Payment ROI Analysis in Real Estate: Common Mistakes to Avoid Oakland Housing Market Predictions for 2020 How to Become Wealthy in Real Estate? Do What the Wealthy Do Invest in These Cities for High Cash on Cash Return with Long Term Rentals Flipping vs Renting: Which Is Better for 2020? Real Estate vs Stocks: Which Is a Better Investment for 2020? What to Consider Before Buying a Rental Property How to Know the Time Has Come for Selling Your Investment Property Buying Rental Properties to Grow Your Real Estate Investment Portfolio Is a Must. 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