Many people dream of making money with minimal effort, whether in real estate investing or in other industries. Passive real estate investing refers to passive income strategies where income is generated with little effort. These methods often involve a third-party that manages and runs the real estate investments. Even though real estate investing isn’t one of the truly passive income investments, it is possible for an investor to put in the effort and time into some forms of real estate investments at the start of the venture and eventually earn passive rental income. Both full-time real estate investors and part-time real estate investors can achieve this irrespective of their rental strategies.
However, people often disagree on whether passive real estate investing is possible with no professional property management being involved. Some real estate investors find the idea to be just a fantasy. The popular notion is that passive real estate investing without professional property management is not possible. However, this is very much possible. Even though it is hard to generate passive income from a rental property without professional property management, it is possible in some forms of real estate investing. Below are some ways that can make passive real estate investing without third-party professional property management a reality.
Strategies to Passive Real Estate Investing Without Professional Property Management
Investing in Real Estate Investment Trusts (REITS)
Real estate investment trusts refer to companies that make large investments in commercial and residential real estate income properties such as malls, skyscrapers, multiple homes etc. REITs are among the best passive real estate investing ventures. The real estate investor can have assets that generate passive income with no managerial work. Management of the income properties is done by the REITs themselves. All the real estate investor is required is to do is to perform a thorough research for an ideal REIT and finalize the agreements. From then, the real estate investor can collect passive income with no major effort or need for professional property management. REITs are usually required to allot 90 percent of its dividends to the associated investors each year. However, the dividends are usually taxed as regular income, which may not be good news to those in a higher bracket.
Investing in Turn-key Investment Properties
Another good way to venture into passive real estate investing without professional property management is through turn-key income properties. Turn-key income properties are investment properties that are bought from companies and are already ready for renting right away. The turn-key company usually has already found rental properties in a good location, made all required renovations and repairs on your behalf, furnished them, and have prospective tenants, at times already renting the property. Most of the time, the turn-key company will also be responsible for the property management duties once purchased.
All these benefits make turn-key investment properties one of the best passive real estate investing strategies. They require the least amount of work. The main work that the real estate investor will need to do is to research property investment companies that offer turn-key investment properties and which can provide a good return on investment as well as steady rental income. With most of the work already done for you, your task as the real estate investor will be to ensure that the decisions made by the turn-key property investment company are right. You may want to perform real estate market analysis and investment property analysis on your own using the right real estate investment tools like the investment property calculator.
After you have completed the work of choosing a good company and suitable turnkey rental properties, the company will offer professional property management that will take it from there. You can now sit back and expect to receive passive income from the turn-key investment properties. Turn-key property investment is a great strategy for beginner real estate investors who are still learning about owning a rental property.
Investing in Real Estate Crowdfunding
Real estate crowdfunding refers to an alternative source of finance used for real estate projects whereby multiple real estate investors pool together fairly small amounts of money in order to provide funding for an investment property or portfolio of investment properties. Real estate crowdfunding investments can be done through equity, where dividends usually consist of rental income, or debt, where dividends comprise of interest income from payment of the mortgage.
Real estate crowdfunding is usually done online and offers a great way for real estate investors to take advantage of passive real estate investing without the need for professional property management. The investor will decide on the real estate property they want to invest in, instead of the company dictating the property they should invest in. It is one of the best ways of making money in real estate if you want to invest a small amount and still get a good return. Another benefit of real estate crowdfunding is the tax advantages received by the investor due to property ownership, unlike when investing in REITs.
With the right research and planning, passive real estate investing without professional property management can definitely be a reality. However, there some other real estate investments such Airbnb investment properties, out-of-state real estate investments, single-family investment properties, and multi-family investment properties that can be used for passive real estate investing by hiring some form of professional property management.
Passive real estate investing can be an amazing way to provide income, pay off your debt, and prepare for retirement. You may want to consult a financial advisor to help you plan for such investments. Be sure to use Mashvisor to learn more on real estate investing.