Did you know that real estate is one of the best ways to generate passive income? If the obvious thought in your mind is rental income, you must also be aware that investing in real estate can burn a hole in your pocket. So, is that the end for us then? Well, no! There are some real estate passive income strategies that can help you invest in high value assets without crores of capital.
What Is Passive Income?
In simple terms, passive income is what you make while performing little or no labor. The interest you get on your bank savings account is a classic example. Investing in a joint firm is another example. Because you are not actively participating in the firm, your passive income is the interest you earn on your capital commitment.
Passive income can be generated in a variety of ways, the most well-known of which is rental real estate properties, stocks that pay dividends, plus even P2P lending. Other options need more work in addition to the initial cash inputs, like developing intellectual property (for instance ebooks and courses) from which you can earn royalties in the future. As time passes, the market keeps opening up and offers new chances and methods of generating passive income.
But among the various ways, real estate is one of the best ways to earn passive income. Now, we shall see what real estate passive income is.
What is Real Estate Passive Income?
Investing in real estate is a common passive income method for many people who have a lot of excess money.
Purchasing property that can be rented out is one of the simplest methods to invest in real estate passively. You’ll fill the property with tenants and earn rent money as revenue, whether it’s commercial or residential.
As an active participant, you manage your real estate properties by screening tenants and collecting rent yourself. You may also accomplish this passively by hiring a management team or corporation to handle the day-to-day operations for you. So, that is where real estate passive income comes in.
Looking to start investing in commercial real estate to generate passive income? There are many platforms out there like Assetmonk. Assetmonk is a new-age alternative real estate investing platform that assists investors with high-value commercial real estate investment opportunities.
The Advantages of Creating Passive Income from Real Estate
- Dilution of Risk
Real estate is a distinct asset type that is not linked to the equity market. This means that the risks involved with stocks do not apply to real estate. As a result, if you wish to diversify your portfolio to reduce risk, real estate can assist. You may diversify your stock and debt risks by investing in real estate, which typically grows over time and provides returns even if your equity or debt investments do not.
- Opportunity for Leverage
You can use real estate as an asset to obtain finances when you need them. For example, you can use a loan against property to mortgage your property and get cash based on its worth. You may then utilize these funds for your business or invest in other profitable investment opportunities to produce excellent returns.
Owning a real estate investment produces an asset and provides security. When necessary, you can liquidate the investment and raise money. Furthermore, any passive income from real estate provides additional financial protection in the event of an emergency.
Passive Income Strategies Via Real Estate That Won’t Put A Hole In Your Pocket
REITs are abbreviated for Real Estate Investment Trusts. These are corporations formed exclusively to aggregate money from various investors. The combined investment is subsequently put into income-producing real estate. REITs function similarly to mutual funds. You do not physically own the property. Simply put, you invest in the trust, which then invests in real estate on your part.
They acquire and sell the property and earn money from this trade. REITs will even lease property for their investors. They then pay out dividends to investors in the form of rental revenue or earnings from property trading. In India, you can affordably invest in REITs with just Rs. 10, 000 to Rs. 15,000.
- Fractional Ownership
Investing in fractional assets entails purchasing a portion of a real estate property. Many investors can invest in high-end buildings such as industrial facilities, warehouses, and residential complexes. Each investor then owns a part of the property, and the property’s revenue is distributed to the investors in accordance with their investment share. Interested in generating passive income through real estate? Check out eXp’s offering in Green Acres, Florida, and discover how their resources and expertise can help you build your portfolio.
The method of investing in costly real estate that does not necessitate a significant investment is known as fractional asset investing. For example, you might invest in fractional assets with as little as Rs. 25 lakhs via fractional ownership companies like Assetmonk. It is significant for small investors with limited funds who want to engage in real estate and yet earn passive income.
- Real Estate Crowdfunding
Real estate crowdfunding, like fractional ownership, is a method of investing in a piece of a real estate asset. Several investors combine their funds for a single real estate venture in this case.
Real estate crowdfunding is often conducted via internet platforms where a real estate transaction is posted. In a few clicks, you can then apply for the deal and invest an amount that suits you. Real estate crowdfunding platforms like Assetmonk would require you to pay just Rs. 25 lacs to start and it is in charge of administering the investment.
Real estate passive income is an excellent method to augment your income without having to work for it. Hence, choose one of the above passive real estate investing strategies and put your money to work.