There are several reasons to pursue passive income real estate. You might do it to achieve financial freedom, finally shedding the fetters of an active job. You may choose to pursue real estate to diversify your revenue sources, thereby creating a securer investment portfolio. Or you might have your eyes on a safe, comfortable retirement.
Whatever the reasons, your first step will always be education. You need to know what you’re getting into, and how to make the most of your real estate investment if you plan on reaping its benefits to the fullest.
This article is here to get you started. Below, let’s explore what passive income real estate is, how to take your first steps, and what strategies are available for creating new revenue streams.
What Is “Passive Income Real Estate”?
Simply put, passive income real estate allows an investor to profit from their real estate without (too much) active involvement.
It’s a slight misnomer; no income is truly, 100% passive. You will still need to involve yourself by searching for properties, scouting a property manager, screening tenants, and/or overseeing maintenance and renovation projects. Still, the work involved earning passive income from real estate pales in comparison to other revenue streams like employment or hands-on investment.
Getting Started: Investing in Real Estate
If education is your first step toward passive income, your secondstep is investing in a property. There is no detailed roadmap for choosing the perfect investment property, but you can point toward common features among profitable rental properties as a guide.
Location is, obviously, a critical consideration. Your location often determines the type of tenants you’ll attract and the vacancy rate to expect. (For instance, if you buy in the financial district, you can expect commercial business tenants).
You can also consider proximity to amenities like schools, public transport, green spaces, restaurants and other businesses. The better situated a property is among amenities, the more attractive it will be to potential renters.
As you hunt for investments, you will also take price and property tax rates into account. Finally, before investing, you should investigate any planned and zoned developments surrounding your investment, as they may (negatively or positively) impact the value of your real estate property.
Strategies for Passive Income
Traditionally, investors chose from two main strategies for passive income: residential and commercial renting. Recently, however, mixed-use development has emerged as a popular third option, combining residential, commercial and institutional tenants.
In the link provided in the intro to this article, you’ll find a strategy for mixed-use passive income real estate that’s gaining popularity. If your rental property encompasses a parking lot or open outdoor area, you can consider enrolling your property in a “proximity network.” Basically, proximity networks create new, passive revenue streams on your property’s open areas by launching modular applications like neighbourhood kitchens, retail storefronts, micro-fulfillment centers and micro-healthcare clinics. In this model, you receive passive income from every inch of your propertyand bolster your property’s proximity to amenities.
If you’re curious about passive income real estate, hopefully, this article has encouraged you to research further. With a little planning and the right partnerships, earning passive income from real estate can be a straightforward path toward financial independence.