What would you do if you could earn money without putting in a ton of effort? What if you could earn a second income without working a second job? This income is called passive income, and it means exactly what it sounds like. Investments like stocks or bonds are types of passive income, and these work to help an individual achieve his or her financial goals.
One of the most popular ways to earn passive income is by investing in real estate. Assuming that an individual carefully studies the market and chooses wise properties, this investment is considered a powerful way to gain high returns. A simple example of real estate investing is buying or renting out a property as a family home or apartments, but even in this situation one has to work with a property management company to make sure someone is handling the day-to-day operations and make important decisions on your behalf. Otherwise, managing that property would become a second job! It’s important to understand what goes into real estate investing before getting involved.
Here are specific examples of real estate investing:
- REITs (Real Estate Investment Trusts): These are publicly or privately dealt corporate houses that manage lots of commercial real estate properties and pool the money of investors to acquire them. Low upfront costs and higher dividends make these more attractive for beginners.
- ETFs (Exchange Trade Funds): These are smart ways to earn cash flows because competitive dividends return options to diversify one’s holdings
- Crowdfunding: These are new opportunities for passive participants to pool funds for a third-party sponsor to buy and manage a property
- Rental Properties: As mentioned earlier, one purchases properties and rents them out.
- Performing Mortgage Notes: These are advanced ways to earn passive income by procuring and managing a performing mortgage note
Regardless of which real estate investment option interests you, a thorough study and trustworthy property manager is required to be successful. There is no doubt that real estate investing also has its downfalls in the form of principal losses or low returns on investment, but these losses can be avoided by letting a good property manager handle your properties and diligently checking on the property market.