Investor Blogs Investing for Income in Real Estate – Consider These Options by Nasser Mansur March 1, 2018February 5, 2019 by Nasser Mansur March 1, 2018February 5, 2019 Real estate investing for income – how does it work? There are numerous reasons why many people become real estate investors and start investing in real estate. Whether it is for the benefits of real estate appreciation, for diversifying their investments, or to simply increase the value of their fixed assets – real estate investing is a very good choice for anyone who’s looking to multiply the value of hos/her money in the short term or the long term. However, one of the best reasons that real estate investors turn to the real estate market is investing for income. But what does investing for income mean? Investing for income refers to investing your money in real estate properties that can generate a “passive” income at a minimal amount of effort from your side. Most real estate investments that use the investing for income model will typically require the real estate investor to allocate the desired amount of money in one or more investment properties and start earning a monthly or a yearly income from his/her investment. Technically, investing for income in real estate is not very different from investing in stocks. Some real estate investments that can generate passive income use dividends as their methods of paying back to the investors. However, with the variety of investment strategies used in real estate, some real estate investments function differently and might require more engagement from the investor’s side than stocks. What are your options when investing for income in real estate? There are numerous real estate investment strategies that real estate investors can choose from depending on the goals they’re trying to achieve and other factors that might affect their investments. Real estate investors who are interested in opportunities for investing for income have two main options or investment strategies to choose from, in addition to other more unique and new methods that can be used for investing for income. Below are the main real estate investing strategies that are available for real estate investors and that can be used for investing for income. Investing for income: REITs REITs (Real Estate Investment Trusts) are among the most popular choices that real estate investors go to when they want to invest their money for a passive income. This type of real estate investing is the most similar to investing in stocks. A REIT can be an investment trust that specializes in a specific type of real estate properties, or it can be diversified across different types of real estate properties. For example, a REIT might specialize in commercial real estate, such as office buildings and shopping malls, or it can specialize in residential real estate, such as condominium and luxury homes. The way you invest in REITs is very simple – you invest a certain amount of money in a REIT by purchasing traded or non-traded exchange. Depending on the type of REIT that you’re investing in, you can choose the investment properties that you want to be invested in, or choose a single property to have all your money invested in. Investing for income in REITs is one of the true forms of passive investments in real estate. You as the investor will not have to be engaged in the management of the investment properties that you’ve invested in. The REIT will manage the investment and all aspects related to it, and it will distribute the profits of each investment in the form of dividends among the real estate investors who have invested their money in it, proportionately to the amount of money they have invested. Related: What is a REIT and is it a Good Idea to Invest in One? Investing for income: Rental properties The most common real estate investment strategy when investing for income is rental properties. Purchasing an investment property for the purpose of renting it out either traditionally or as a short-term rental (such as through Airbnb) is one of the best options for investing for income in real estate. This real estate investment strategy, however, unlike what many beginner investors believe, is far from being a passive income investment. Rental properties require a serious commitment from the real estate investor for managing the rental property and tending to the tenants who will be renting the property. Beyond the amount of time and effort needed for managing and running a successful rental property, rental properties, in general, can generate some of the highest returns in real estate investing. One of the biggest advantages of investing in rental properties is that if you’re purchasing an investment property using a mortgage, so once you rent it out and start generating a rental income from the property, you can use that rental income to pay off your mortgage. This means that the tenants who are renting your property will be basically paying off your mortgage for you. Once your mortgage has been completely paid off, the entire value of the investment property becomes pure profit for you. In addition to the rental income generated from rental properties, real estate investors will have the option of selling the property after a number of years to cash in on the profits and maybe even benefit from any appreciation that might have affected the value of the property. Related: How to Make the Most Money When Investing in Rental Properties Investing for income: Online platforms The final and newest real estate investment strategy when investing for income is to invest in online real estate investing platforms. Online real estate investing platforms are very similar to REITs, with the main difference being the easy process of investing in them. Some of the best examples of online real estate investing platforms include RealtyShares and Fundrise. Both of these online real estate investing platforms behave differently, but each aims to provide the same type of utility in allowing real estate investors opportunities for investing for income. Realty Shares brings real estate investors, borrowers, and sponsors together and helps them find opportunities to invest in real estate. Borrowers can find opportunities by providing ideas for real estate projects, while sponsors find real estate investors who are willing to lend the money to the borrower. Afterwards, the borrower will commence the project, and once the project starts earning money, the real estate investors who have contributed in it will earn a portion of the profits depending on the amount of money they have invested. Fundrise, on the other hand, is an online real estate investing platform that specializes in commercial real estate and behaves very similarly to REITs. In fact, Fundrise refers to itself as an eREIT, which is a hybrid of an exchange-traded REIT and a non-traded REIT. Investing for income in Fundrise is very simple and can be done from the comfort of your own home using a computer. You can browse the available investment properties that they have, and you can invest any amount of money that you want, down to a minimum of $500. Related: Here Are the Best Real Estate Investor Websites Bottom line When you’re considering your options for investing for income in real estate, you will find a number of great options that are available to you. The options mentioned above are by no means the only ones out there! If you do your research, you will find other types of real estate investments that can be used for investing for income. My personal favorite out of these types of real estate investments is the rental properties strategy. I prefer to have a tangible investment property that I fully own and that I can use for different purposes if I choose to. What’s your favorite form of real estate investment? Let us know in the comment section below! Also, make sure to check out Mashvisor – an online real estate investing platform that can help you find the best rental properties to invest in anywhere in the US, based on accurate readings and projections that estimate the return on investment that each investment property has before you commit your money to purchasing the property! Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL Investor ToolsReal Estate WebsitesREITsRenting Out 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 The Ultimate Guide to Cash on Cash Return in Real Estate Investing Next Post Can Airbnb Investment Properties Be Passive Income Investments? Related Posts Real Estate Market Analysis: The Basics Impact of Exchange Rates on Real Estate How to Find Multi Family Comps: 4 Ways How to Find Rental Comps Using Mashvisor Real Estate Investing 101: What You Need to Know About Positive Cash Flow Real Estate Ever Consider Investing in Gatlinburg Real Estate? 4 Best Ways to Find a Property for Sale in 2020 The Boston Housing Market 2019: How’s It Looking for Investors? 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