Some might be looking to create multiple revenue streams to diversify their monthly incomes. Others may be looking toward retirement and realizing they’ve saved too little. Whichever the reason, creating passive income is one of the most important steps towards financial freedom.
With passive income, you possibly could live the same way as you did during your top earning years. Passive money is money earned without spending precious time working for it.
If you are ready to create passive income through real estate investing, you are in the right place.
Read on for advice on how to build passive income through real estate.
1. Home improvement
You can do home repairs and renovations for a profit. But before you bring out the screwdrivers and paintbrushes, there are a couple of things you should take into account.
- Don’t over-improve. Don’t add marble countertops, expensive wood floors and custom wood cabinets in a neighborhood where all other homes have laminate countertops and linoleum floors.
- Choose the right neighborhood. Look for a neighborhood where values are rising, it’s safe, and where people want to live.
- Hire good contractors. Ask for references, call those references and look at their completed projects.
- Buy at the right price. The idea is to make a profit. Look for a house which you can add value and sell for more than you spend on the improvements.
2. Out-of-state investing
Buying out-of-state investment properties is simpler when you know how to avoid common pitfalls. If you are new to this real estate investing method, you are likely to face a couple of challenges. Thus, careful planning and analysis is necessary.
- Take advantage of technology. You don’t necessarily need to be a technological wizard, but you should have a good grasp on how it can help you. Between Skype, video property tours and electronic documentation, taking advantage of technology can make out-of-state property investing simpler.
- Develop local contacts. Before making a solid offer, make sure you have a solid team on the ground. From a realtor to a contractor.
- Do your homework. Know everything about the area. From property values to employment to tax rates.
- Have a solid plan. You need a clear vision of what it is you want to accomplish.
3. Turnkey rental properties
You can also earn passive income through investing in turnkey rental properties. A turnkey rental property is a fully renovated home or apartment building that an investor can purchase and immediately rent out.
Usually, you can get these properties from firms that do housing renovations.
Here’s a definitive guide on how investing in turnkey property works.
4. Airbnb
Airbnb is a great way to earn extra money. You also get to meet new people from all over the world. With Airbnb, you earn passive income through renting out your extra room if you become a member.
Here are some tips for running a successful Airbnb business:
- Respond quickly to prospective guests.
- Besides listing property details, also highlight the features of the neighborhood.
- First impressions matter. Reply quickly and pleasantly to all guest queries to create better rapport and connection.
- Be ready to respond at any time if you want to be a successful Airbnb host.
- Quality photographs can make a huge difference.
5. E-commerce store
One of the strongest marketing strategies today is creating an e-commerce store for your real estate business. More and more people are doing their searches online. For example, 90% of people use the internet to search for homes.
Also, in the past four years, search giant Google has seen a growth of 253% in searches related to real estate.
With that in mind, your plan here should be to boost your store’s traffic. The more traffic, the higher the chances are of getting prospective clients.
6. Real Estate Investment Trusts (REITs)
Another way to earn passive income is via real estate investment trusts. These are companies that have ownership, and in most cases, operate income-generating real estates.
REITs are more or less like mutual funds, where an investor has a variety of options to invest in. From Timberlands and hotels to apartment buildings and offices.
Dividends from REITs are substantial because the companies are required to distribute a substantial portion of their taxable income to shareholders each year. You are also able to minimize risks because your investment is diverse.
7. Rental properties
One of the most popular passive income streams is investing in rental properties. Unlike other passive income methods, rental properties provide faster returns to investors.
With rental properties you never have to worry about your money running out, unless you decide to sell the property. You even have the option of letting a management company do all the dirty work for you.
Building passive income through property investment is a great opportunity because once it’s set up, you don’t have to keep working it. That being said, it nonetheless requires some up-front work.
