Passive income in real estate? YES, it is totally possible to make money in real estate passively. In fact, it is one of the best avenues when it comes to real estate investing for beginners.
Passive income strategies in real estate offer two great benefits for beginners:
- Make money in real estate from the comfort of your own home
- Learn the ropes of real estate investing while reducing some of the risks as a beginner
Of course, not every one of the passive income strategies is the same. Each one is unique and offers something different to beginner real estate investors. With this guide, you should be able to choose which of the following passive income strategies will open the door to real estate investing for you.
Keep in mind that, even with passive income strategies in real estate, you’ll have to dedicate some serious time initially for research. This is simply smart real estate investing, no matter passive or active. Never put your money into a real estate investment or property investment company you can’t confidently say will make you money.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Real Estate Investment Trusts
One of the best passive income investments is real estate investment trusts or REITs. With this passive income strategy, a real estate investor turns to property investment companies that own and manage investment properties. With REIT investing, you’d be investing in a real estate investment portfolio (likely commercial real estate). As the company rents out the investment properties, you’ll receive rental income.
All you have to do is research the REITs of your choice to make sure they’ll bring a good return on investment. Look for companies offering REITs that are very transparent about their past investments.
Real Estate Crowdfunding
Real estate crowdfunding is one of the newer passive income strategies in real estate investing. A real estate investor chooses a real estate crowdfunding site and invests in either a portfolio or an individual investment property. As the real estate investor, you won’t have to worry about property management or anything other than monitoring your real estate investment portfolio and return on investment.
The great thing about real estate crowdfunding is a real estate investor can get started with as little as $500! This low cash investment is great for real estate investing for beginners. Just be sure to choose from some of the best real estate crowdfunding sites that you can trust.
Real Estate Syndication
Real estate crowdfunding is actually a form of real estate syndication, which is simply real estate investors coming together and funding a real estate investment. There are other forms of real estate syndication to consider when looking into passive income strategies. For example, a real estate partnership or even a real estate limited liability company can be a good choice.
As long as you have the funding and find someone who has the expertise and time to put in all of the work, any form of real estate syndication can make for the best passive income strategies.
Turnkey Rental Properties
Want to own investment property but still interested in passive income strategies? Then consider turnkey rental properties. A turnkey rental company will take care of finding investment properties for you and usually lining up tenants to rent the property. The best way to ensure passive income investing with this strategy is to choose turnkey rental properties that have professional rental property management already in place. That way, after researching the company and the investment property, your work as a real estate investor is done. Sit back and receive passive income.
Applying Passive Income Strategies to Rental Properties
Did you know that regular old rental properties can be passive income investments? With a little tweaking to your real estate investing strategy, rental income can become passive income. This can be applied to Airbnb investment properties, a few single family homes, or multi family homes.
The reason for the debate over passive income properties in real estate has a lot to do with the effort it takes to find a great real estate investment as well as rental property management. That’s why there are two elements needed to create passive income investments out of rental properties:
- A rental property calculator
- Professional property management
Each of these will make the two major stages of real estate investing for beginners on par with passive investing.
The Rental Property Calculator
A rental property calculator is the best tool for real estate investing for beginners. It eases the process of finding an investment property that is sure to bring a good return on investment. With a rental property calculator, you can cut down your investment property search and save time- the first characteristic of passive income strategies.
Besides saving you time, a rental property calculator helps you choose a profitable real estate market by presenting to you the kind of return on investment you’ll get there. The real estate investment tool shows you the median property price, cash on cash return, cap rate, and occupancy rate- all of which will help a beginner real estate investor quickly find the best markets for passive investing.
Once you settle on a real estate market (here is a great choice), you can easily find the best real estate investments with a rental property calculator. This tool will show you the cash on cash return, cap rate, and occupancy rate of any investment property in the real estate market. These metrics will help you find investment property with a great return on investment, the foundation of passive income investing.
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Professional Property Management
Once you have an investment property to your name, you’ll need a property management company or manager lined up to take charge. There are many companies offering property management so you’ll need to be diligent in researching and finding the right one for you.
Interviewing companies and asking for references from previous tenants and real estate investors is a good start. Make sure the professional property management company has experience in the real estate market and with the kind of investment property you own so they can be sure to attract the right tenants.
Once you find the right professional property management company, your investment property should truly be a passive income investment. They’ll manage everything from tenant turnover to daily maintenance. You’ll have to simply monitor the budget for your investment property and forfeit a percentage of your rental income. But, it can be worth it for the passive income.
What About Becoming a Landlord?
Becoming a landlord is usually not synonymous with passive investing. That’s because while passive income strategies in real estate typically require little to no work, being a landlord requires a lot of work. However, there are ways to make rental income feel more like passive income.
For example, some real estate investors have worked with smaller professional property management companies with what has been called a “lease up only” contract. With this kind of contract, the professional property management company works to get tenants set up into the investment property for you. Marketing and advertising the rental property as well as tenant screening and interviews are taken care of by the company or manager you hire. After that, the contract is up and you become a landlord. If the professional property management did their job right, you’ll have a no-hassle tenant on your hands.
Once the tenant is in the rental property, hire a trusty handyman to take care of any maintenance issues that may come up. Automate rent collection rather than collecting checks and that’s one more thing that makes rental properties passive income investments!
Passive income strategies are a great way to make money in real estate for beginners and experienced real estate investors alike. Just know that there will always be some level of work involved in real estate, even if it’s just a few hours of research. Even so, passive income in real estate is worth the small effort.
Don’t forget about our role in your success with passive income investments. Start your 14-day free trial now and get ahold of Mashvisor’s rental property calculator.
Have you had success with passive income strategies in real estate? Share your experience in the comments below!