7 Ways to Make Passive Income with Real Estate Investing

April 23, 2019
22 Comments

Last Updated on April 23, 2019 by NandiNN

How Do I Start Investing in Real Estate?

There is no question that is money in real estate investing especially if you are looking to make good passive income.

If you are one of those that are looking for a way to make some extra cash in addition to your salary from your full-time job?

Maybe you have been thinking about real estate investing for a few years now but have been afraid of the prospective of becoming a landlord. You are not alone. Many people erroneously relate investing in properties to being a landlord, which can actually be a scary and off-putting endeavor.

In this case you will be happy to know that real estate can be a passive investment strategy. More and more people are buying properties in the US housing market for investment purposes to make money not lifting a finger.

If making passive income with real estate investing sounds like an appealing option, continue reading to figure out the 7 best strategies for passive property investments.

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How Do I start Investing in Real Estate?

Real estate investing is something I would highly suggest everyone try out at least once. The income you make is so passive, that most of the time you do absolutely nothing but get paid for it.

Apart from investing money up front, they are a few things you need to know before you decide to invest in the real estate business.

Apart from knowing exactly how much money you can afford to invest, how to find the right investment property, the logistics involved from buying property, you also need to know the type of real estate investing option is right for you.

We will discuss a few options below.

Making Money with Real Estate Investing

Everything you need to know about making passive income with real estate investing is listed below:

1// Long-Term Rental Properties

Buying a house or an apartment to rent out on monthly basis is the longest standing and still most popular real estate investment strategy. This type of rentals are known as traditional rentals or long-term rentals.

Many of you have probably heard horror tenant stories from your friends and relatives who have been landlords. Getting phone calls from angry renters at midnight, collecting rent on monthly basis, dealing with bad tenants and late payments, repairing excessive damage, and tackling an eviction is something that we all dread.

However, you don’t necessarily have to become a landlord when investing in rental properties.

What? Anyone else excited here?

Recent decades have witnessed a rapid increase in the number of professional rental property management companies which take care of all aspects of owning and renting out a property.

The reason for this spur is a rise in the number of part-time real estate investors in the US market who have another 9-to-5 job and who don’t have the time to manage a property and deal with tenants on their own.

Professional property management services make rental properties a source of passive income.

Moreover, they have the potential to increase your return on investment as they optimize the management process, decrease the recurring costs, minimize tenant turnover, and set the optimal rental rate in place, all the while letting you focus on your main career or enjoy your passive income.

2// Vacation Rentals

Another real estate investment strategy which does not require much effort is vacation rentals. They are also known as short-term rentals or Airbnb rentals.

After the emergence of the Airbnb.com platform in 2008, the home sharing industry exploded into a full-scale investment opportunity.

Investors are no longer buying real estate properties to only rent them on monthly basis. Many investors switch to renting out on Airbnb and other similar platforms on nightly or weekly basis.

The reason is that frequently vacation rentals yield significantly higher return on investment than long-term ones.

Once again, turning short-term rentals into a source of passive income is plausible because of the ever-increasing number of property management companies which offer services tailored to these rentals in specific.

If you live in a popular tourist destination and decide to invest in the local housing market, you can automate all processes related to your vacation rental with the appropriate software.

But you may still need to perform some tasks such as cleaning, changing the sheets between guests, etc.

No worries though. If you want a completely hands-off experience or if you decide to invest out of state because of a better opportunity, you can hire a company which will take care of literally everything.

They will send you your rental income once a month, and you’ll have to do absolutely nothing. Now that’s passive income, right?

Are you interested in buying an investment property to rent out on short-term or long-term basis to make passive income? Mashvisor, a real estate analytics tool, can help you quickly find lucrative traditional and Airbnb rental properties.

A research process that’s usually 3 months can now take 15 minutes. All real estate information is provided in easy to understand visualizations.

Moreover, now you get a 25% off your subscription. Real Estate investing is now much easier than it was.

3// Turnkey Properties

Maybe the most popular passive income strategy among real estate investors are turnkey properties.

These are either newly constructed or fully renovated properties which are completely ready to be inhibited when you buy them. Sometimes an investor can even buy a turnkey property with the tenants in place.

Moreover, turnkey properties are managed by a professional property management company. This assures that your income from owning such an investment property is 100% passive.

A great advantage of turnkey properties is that you can start making money right away. If you buy a regular real estate property, you might need to do some fixes and repairs before you rent it out to tenants, which can take a few weeks or even months.

This is not the case with turnkey properties though which makes it one of the best real estate investing option.

4// Real Estate Syndication

In case you are not ready to own an entire investment property by yourself or do not have enough financing to do so, you can become part of a real estate syndication.

If you are not a real estate expert, you probably have no idea what this means.

Real estate syndication is just the fancy name of a specific form of a real estate partnership. The idea is that a few investors pull their money together in order to buy a bigger, usually multi-family property.

These properties tend to bring higher return on investment, which makes them a lucrative option.

The vast majority of the work and the decisions are the responsibility of the so-called syndicator or sponsor. This is the person who manages the investment but does not necessarily invest his/her own money.

For all other parties of the syndication – the investors – this is a passive strategy, which brings them both short-term profit in terms of rental income and long-term benefit in the form of appreciation.

This type of real estate investing is the ideal way for those that are just not financially ready to put a huge amount out right but are still eager to make extra money passively.

6// Real Estate Partnerships

You can also invest in a less structured and less formal real estate partnership.

Real estate investing partnerships can assume various forms, sizes, and strategies. They are an excellent way for beginners to enter the exciting world of real estate investments as long as they are able to partner with more experienced investors who are willing to do most of the work.

Partnerships can be arranged in many different ways, including in such that some of the members provide the money and others do the work.

This means that you can earn passive income, but you will need to be able to provide a significant portion of the financing. After all, your partners have to see your value in the partnership.

In order to avoid problems down the road, make sure to write down a detailed partnership agreement and have it signed by all parties.

This agreement has to clearly outline the responsibilities of each partner, the structure of dividing the profits, and the measures to be taken against partners defaulting on their duties.

6// Real Estate Crowdfunding

The previous four strategies require at least a few thousand dollars in order to start making passive income from real estate investing. Does this mean that real estate cannot bring you money passively if you have just a few hundred dollars?

The answer is that real estate can be a passive investment strategy regardless of how much initial capital you have.

High tech and the digital economy have facilitate the establishment of real estate crowdfunding platforms. In brief, these are websites whose sole purpose is to pull together the money of numerous people to buy common investment properties.

Some crowdfunding platforms allow you to invest as little as $500, making real estate investing accessible to just about everyone.

All you have to do once you’ve invested your money is to sit down and wait for your profit.

7// REITs

Real Estate Investment Trusts (REITs) own and/or manage mostly commercial real estate income-producing assets, including properties and mortgages.

They provide investors with ongoing dividend yields as well as long-term capital appreciation.

In a sense, investing in REITs resembles very much investing in stocks. All you have to worry about is identifying the top REITs for 2019 and have a few thousand dollars to invest.

Most REITs have a minimum requirement for the cash invested, so keep this mind.

Real estate investing is one of the best ways to make money because of the multitude of options and opportunities. Moreover, it is a safe investment strategy with very low risk.

Is Real Estate Investing Worth It?

Absolutely! I really believe that real estate investing is worth your time and effort. If done correctly Passive income from property investments is absolutely worth with the 7 strategies outlined above.

By choosing the right options, choosing the right property in the right neighborhood and understanding what you are working with, you can be making passive income in no time.

We are always rooting for girl bosses like you, and if real estate investing is something you want to try out, we want to hear from you. Leave us a comment below!

Daniela Andreevska is Marketing Director at Mashvisor. She has been writing about real estate investing for a number of years. Previously, she worked in economic policy research and fundraising. Daniela holds a Master degree in Middle East and Mediterranean Studies from King’s College London.

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