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How to Invest in Real Estate for Passive Income

How to Invest in Real Estate for Passive Income

Real estate is an ever-changing market, yet an enduring one. Investing in real estate rental properties almost always is a good idea, and even bad markets seldom stay bad, especially if you’ve done your homework and researched good real estate markets and identified quality investment properties. If you are considering taking the leap into real estate investing, here are some ways you might go about doing so.

Basic Rental Property

At its most basic level, real estate investing simply requires you to buy a space and rent it out to a tenant. It might be a portion of your garage a friend uses to store a car, or a large apartment complex with many renters. For most, though, a first basic rental property likely will be a single-family home, duplex, or possibly a four-plex or more, that you will rent out with the intent to generate a profit off monthly and annual rents, fees, deposits, and other income sources. You are responsible for maintaining the property, renting it out, collecting rent, and handle all related bills and other business matters.

Turnkey Real Estate

Turnkey real estate investing requires you to buy a rental property and pay a property manager or other entity to handle all administrative, management, and maintenance duties. You need to do your homework and identify real estate markets with relatively high rents, lower property values, high occupancy rates, and low costs of doing business, such as local taxes.

Once you find and buy a good investment property, you then pay a good property manager to administer it for you, and all profits you get afterward are purely passive. Better still, because you aren’t busy with daily property administration, you have time to find your next turnkey real estate investment property, and gradually build your real estate investment portfolio, as well as grow your passive income.

REITs

REITs are real estate investment trusts and, like turnkey real estate investments, and offer the potential for truly passive income, with risk involved. A corporation creates at REIT and sells shares to investors, who profit off the performance of that property, while corporations benefit from increased capital, which it can use to develop the properties to generate greater profits. Federal law requires corporations to pay out 90 percent of its taxable profits as dividends to REIT investors.

Real Estate Investment Groups

Similar to REITs, real estate investment groups allow you to invest in individual or multiple rental properties, including condominiums and homes that an investment group buys and administers. You can buy one or more properties through the investment group and never have to worry about daily maintenance and other tasks. The investment group ensures the property is managed and leased out, while you collect your share of the profits as passive income. If you choose to participate in an investment group, it’s important to ensure its properties actually exist, and the investment group operates legally and profitably.

Many Options for a Balanced Portfolio

There are many outstanding real estate investment options available to you that will help to grow your real estate investment portfolio and your investment income. If you do your homework and invest wisely, you can generate multiple streams of truly passive income that can last through your retirement years and leave a financial legacy for your heirs.

Click here for more information on investing in turn key rental properties.

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