Few
investments have created as much wealth as real estate. Investment in land and
property seems to be the only true constant across the history of investing and
wealth building but is truly passive income from real estate investing
possible?
Noah George says Passive income is
technically an income you receive on a regular basis that involves little
effort on your part. You get paid every month, quarter or year but do not
participate in management or contribute work in the investment.
Passive
real estate investing is one of the hottest topics for investors with no lack
of stories by successful real estate investors trying to sell their strategies.
Is Direct Real Estate
Investing Passive Income or Not?
When
most people talk about direct real estate investing, they usually mean either
buying to remodel and resale at a higher price (flipping) or buying to rent for
a monthly income. While house flipping can be extremely profitable, there’s
nothing passive about the strategy so we’ll stick with real estate rentals for
this post.
I
know a few investors that simply act as the “money” and do little more than
look over reports brought to them by different contractors and managers. Most
of them started in the business by doing more of the work but have now grown
their portfolio to cash flow enough that they can hire the work out.
This
level of passive income real estate investing is in stark contrast to what many
people try to do when starting out in the real estate investing business. I’ll
go through the process of finding, leasing and managing your own properties
below but you’ll quickly find that it can be a part-time job at the very least.
Like
a lot of passive income strategies I’ve seen, real estate rentals can fall on a
pretty wide range of passive income potential depending on your strategy.
Noah George says the New Opportunity
for Real Estate Passive Income in Crowdfunding
I’ll
go through the entire process of finding real estate properties, analyzing
investments and managing your passive income properties but new laws have been
passed that may solve all the problems in passive income real estate.
New
laws around crowdfunding have opened the door for websites like Streitwise
which allow investors access to real estate projects. Properties are
professionally-managed so you don’t have to worry about a 3am call to fix a
leaky faucet and management fees are lower than investing in REITs.
With
real estate crowdfunding investments, investors can get access to different
property types and locations across the country. That’s critical to
diversifying your investments for safety and returns have been excellent.
How to get your Passive
Income Real Estate Empire off the Ground
There
are a lot of moving parts to a passive income real estate business model.
Before jumping into your first property, there are a few questions you need to
ask yourself.
Do
you want to rent commercial or residential properties? I started my
professional career as a commercial RE agent before starting residential
investing. Buying and renting out commercial space like office, industrial and
retail will generally yield a lower return but will also involve far fewer
headaches. The drawback to commercial space is that it costs much more to buy
one property.
In
which socio-economic neighborhoods do you want to buy? I know real estate
investors that have done very well buying and renting in lower-income
neighborhoods. For me, it was a huge mistake. I fell into the trap of thinking,
“I can buy a house for about half the cost as what I would pay in a better
neighborhood.Even if I get slightly lower rent, say 70% as much, I’m still making
a higher return.”Wrong!The money you lose on tenant turnover, unpaid rent and
repairs far outweighs any benefit to buying property at a discount. Now, I
always recommend to investors to never buy a house somewhere they wouldn’t want
to live. If the business does poorly, you may end up living in one of your
homes.
No comments:
Post a Comment