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Earning passive income in real estate

Earning passive income in real estate

Let us start by examining the meaning of passive income. For the purposes of this undertaking, we will define passive income as the emolument generated from a limited partnership or investment property which an individual isn’t effectively active. One of the most popular ways to make passive income in the modern era is through real estate investment. However, you don’t necessarily have to possess a physical property to be a real estate investor. Let us take a look at ways to earn passive income in real estate.

1. Crowdfunding

It’s hard to not have noticed that the investment sphere has shifted drastically in recent years. As such there are investment options available for those who do not own either residential or commercial property. Crowdfunding is one of the most effective options for real estate investment. Crowdfunded property institutions operate in much the same manner as modern peer-to-peer lending firms. It is also possible to get your foot into the property investment space and make passive income without investing lots of money. Moreover, you forego the tedious work that direct property proprietors regularly need to do. Lastly, it is of great significance to understand that crowdfunded property investment is accessible to two categories of people. These classes of people are either accredited investors or non-accredited investors.

2. Real estate investment trust

Another investment that can generate passive income is through a real estate investment trust (REIT). Simply put REIT’s are ventures that are adept at investing in a diversity of real estate that the majority of people would not have the capital to invest in. Examples of the heterogeneity of real estate could include shopping malls, large apartment complexes, as well as, industrial buildings. Similar to the stock market, investors buy shares in REIT’s. However, the biggest drawcard of REIT’s is the huge sum of money they pay out to their shareholders via regular dividends. In a nutshell, real estate investment trusts procure property and charge tenants rent. That rent is then paid back to investors through dividends.

3. Traditional property ownership

It is also possible for traditional real estate ownership to be passive. Earnings from traditional real estate ownership can either be through residential rentals or commercial rentals. However, it is usually advisable to engage a property manager to oversee the day to day running of your investment properties. Traditional property proprietorship is far from passive. However, acquiring the services of a professional real estate management company will aid make it more passive.

Lastly, there are a variety of property investment options out there. As such take the time to explore the various options to ascertain which one is the best fit for you. By doing so, making money through real estate is a viable investment choice.

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Teddy Chibanguza

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