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3 Best Passive Real Estate Investment Strategies

By Jamie Richardson | April 14, 2021

Real estate investment can be a smart move if you’re doing it right. For instance, real estate can become a passive source of income to keep you afloat in case you lose your job or decide to change companies. In addition, it can also be a nice way to retire without worrying too much about money. 

However, many people stay away from such an investment because they think it requires time and money for a property to start generating income. And, while you will have to invest a little in the beginning, the overall effort is worth the result. 

Therefore, today we will discuss the best three methods to generate passive income from real estate investments. 

#1: Real Estate Crowdfunding

Real estate crowdfunding is one of the easiest ways to invest in real estate without getting in too deep. With this method, you invest as much as you feel comfortable and receive dividends or long-term capital in exchange. You are not the owner of the property you are investing in, which means you can’t be held liable for repairs or other types of damage. However, the owner of the property will have to return your investment according to the initial agreement. 

Now, there are many reliable real estate crowdfunding platforms you can choose to use, but it’s best to be patient and check the trends first. While there is a good chance to get a better return compared to other investments, there is no guarantee. 

#2: Work with a Property Manager

If your budget allows it, it’s a good idea to identify and invest in the market for rental property. However, this is a move that requires advanced knowledge of the current and future market, so it’s best to ask for specialized advice. 

Still, once you’ve made the investment and own the property, it’s best to partner up with a reliable property manager (there are many such companies in the US). While this may look like a part of your ROI would go away, it’s actually a fantastic move that can bring even more income your way. 

Property managers are real estate professionals who understand what type of tenants work best for your property and can make sure the occupancy rate is always filled. They will also take care of any issues that arise, which means your efforts will be minimum. 

#3: Choose a Real Estate Investment Trust (REIT)

REIT is the classical version of real estate crowdfunding. In this case, the trust uses the funds received from investors to buy and run various real estate properties (which are commonly owned). 

In exchange, the investors receive dividends on a regular basis, and can also make money in the long run through capital gains. Just like with crowdfunding, the investors don’t have to worry about the various issues that come with ownership and don’t have to learn about any real estate marketing tools - this is the job of the trust administrators. The investors put in minimal effort and get passive income in exchange.

Wrap Up

Regardless of how you look at it, real estate can be a great source of passive income, provided that you make the right decision. Therefore, whether you choose to invest in properties directly or through a crowdfunding platform /trust, it’s crucial to first do your research and understand the trend for the following years. 

Once you know the type of development that is projected for the area you are interested in, it’s easier to make smart investments and get a nice passive income source. Overall, the idea is to take your time and make smart decisions.  

Jamie is a 5-year freelance writer who enjoys real estate. He is currently a Realty Biz News Contributor.
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