The world's highest earners, and those with the overall greatest personal wealth, all share the same tip about how they made their money: to earn wealth, there's no reason for you to work harder—you just need to work smarter.
The world's richest people rarely earn from the work they do or the business endeavors they start. Instead, it's what they do with the money they earn from the work that allows them to get rich. People who know how to put their money to work are the people who can reap the biggest rewards. They are the ones achieving financial freedom.
One of the best ways people can get their money to work for them and earn passive income is by investing in real estate.
Did you know that over the last 200 years, 90% of the world's millionaires have created additional wealth through real estate investing? It's a passive income stream that has long proven to be one that can bring you success. Real estate investing has staying power.
If you are interested in passive income, real estate investments may be right for you. The key to mastering passive income from real estate is understanding what to buy, when to invest, the best kind of properties or real estate investment funds to put your money into, and how to maximize the return on your real estate investments.
Here's what you need to know about creating passive income via real estate so you can start making your money work for you.
Jump to a Section:
What is Passive Income Real Estate Investing?
Passive income real estate investing works differently than choosing real estate as a career path that earns you money. Instead, those who take up passive income real estate investing simply put their money into some kind of real estate (land, rental property, a home, commercial real estate etc.), and they reap the financial rewards from that investment.
Passive income real estate investors are not necessarily actively involved with the management of that property, and while they can participate in management or ownership decisions, they do not have to.
Many passive income real estate investors simply put their money into a real estate investment, then sit back as the money comes back to them (and then some). You don't have to have a significant amount of money to become a passive real estate investor—and you don't have to go into a brokerage firm or an office to do it. In reality, you can do it from the comfort of your own computer through online investments.
Why is Passive Real Estate Income Important for Your Investment Portfolio?
If you have a solid, well-rounded investment portfolio, you may wonder if passive income real estate investing is a worthwhile endeavor. Is it smart to put part of your portfolio into a project you have no hand in? The answer is that passive real estate income can be extremely important when it comes to ensuring your financial safety and success, and it can be of great benefit to you for a number of reasons if you decide to invest.
Here are some ways passive real estate income can help assure your financial success:
It brings you income without taking time from your work. Spend time generating income at your main job, and know that you're going to be bringing in more money that won't require you to take time away from what you spend your main focus and talents doing.
It helps you build your savings. Passive income from anything is a great way to build your savings. It takes little or no energy and as it's deposited into an investment account, it allows your savings to grow, without you even noticing. If you are looking to build your savings to cover emergencies, fund a big purchase, or just make sure you have enough stored away to someday start a dream endeavor, passive income real estate investing is a great option. It's a simple way to make sure your savings are growing.
Passive Real Estate Generates Residual Income. Usually, when you work on a project or have a job, you only earn money on that project or job when you're performing actual, physical duties. When it's complete, the funds stop coming in. One benefit of passive income of any kind is that it generates residual income. Even long after the project is complete (aka the building is built, the community established, and the rental property is inhabited), it will continue to bring in income.
It can help you pay off debt. Passive income can be compounded and constantly grow or can be delivered to your bank account that you can use for anything that your regular employment income doesn't cover. If you have any debt, passive income from real estate investing could be a great way to pay off that debt. Simply dedicate the income each month/period to that debt, and one day, you'll look at your credit card balances or car payments due and see they're at zero. You won't have had to lift a finger for that to happen.
You can use passive real estate income to fund your children's college education. If you have kids, paying for their immediate needs can be expensive, and the money you earn from your current job may be just enough to cover the necessities. When you generate side income from passively investing in real estate, you can set that money aside in a fund, then when your children reach college age, they'll have a large sum to help them cover their tuition, room and board at school.
How to Invest in Real Estate for Passive Income
For most people, there's no question that investing in real estate as one of your passive income streams is a smart idea. However, you may still feel uncertain about it because you don’t know how to begin. Investing in real estate is easier than you might imagine. Here are some tips for investing in real estate for passive income, you can:
Invest in real estate mutual funds
Invest in real estate investment trusts (REITs)
Put your money into a real estate crowdfunding platform
Pool your money with other investors to purchase real estate, creating Real Estate Limited Partnerships. This reduces your risk rather than investing on your own
Buy mortgage-backed securities, which is essentially an opportunity to lend money to people buying a home. Mortgage-backed securities are considered safe and they pay high interest.
Invest in tokenized real estate
Put your money into innovative investment structures like the EquitySlice 10% Real Estate Income Investment Fund
What are the Risks of Passive Income Investing?
Passive income investing is typically a smart, low-risk move if you have the money to invest. But the process doesn't come without risks.
When you invest in any passive income asset, you run the risk of losing some or in very rare cases all of your principal over time. For example, in the case of both a stock or REIT investment, this can occur when the value of the investment falls to perform — either due to internal problems with the underlying asset (the company whose shares you've purchased, or the REIT's real estate portfolio), or due to a general market downturn. Your asset's value may decrease in either case.
Just as with any investment, it is critical that before you consult with an expert or do your own due diligence to make sure you find the safest and most lucrative investments you can.
Ready to Get Started Investing in Real Estate? EquityBrix can help!
For most people, becoming a passive income real estate investor has many benefits. By becoming a passive real estate investor who can generate money from your investment, you can focus on the work you really specialize in, while still bringing in extra income on the side - long after a project is "over" or completed.
EquityBrix can help you grow your wealth through our fractional real estate investment platform. Our team marries the needs of investors and real estate developers by providing opportunities for above-market returns. EquityBrix is committed to creating high-yield investment offerings, and we can help guide you through the new era of real estate investing.
If you want more information about tokenized real estate investing go to EquityBrix or EquityBrix.com/Learn.
If you are looking to grow your wealth and diversify your investment portfolio by learning about innovative ways of investing in real estate go to EquityBrix, or contact us for more information, or sign-up for the EquityBrix Newsletter.
*Disclaimer: EquityBrix is not an investment adviser. This information is for educational purposes only and does not constitute investment or tax advice. It’s important to be informed and to make your own investment decisions or do so in consultation with a professional financial advisor. Under no circumstances should this material be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment. Any such offer or solicitation will be made only by means of a written online prospectus relating to the particular investment.
FAQs
What is passive real estate income?
Passive real estate income is the income you earn from investing your money into a real estate property or project that you don't have to actively work on. It is income that is additional to what you earn from your main occupation. It allows you to build up your savings, pay off debt, diversify your portfolio, all while dedicating your time and energy elsewhere.
Is real estate good passive income?
Yes, real estate is good passive income. Real estate is a relatively low-risk undertaking when it comes to making your dollars work for you. Ninety percent of millionaires in the last 200 years have made some of their money from real estate, which shows it's likely a smart and effective way to bring in passive income.
What is the most profitable passive income?
While real estate can be profitable in a variety of ways and many factors affect each profitability, rental property tends to be the most popular and profitable way to generate passive income through real estate. Rental property can either be commercial or residential—though residential rental property tends to be a safer investment.
