Reaching a value of US$613.60tn in 2023 and with an expected growth rate of 3.52%, the real estate market offers plenty of opportunities for investors. Many people are getting direct income from real estate, but the potential for passive income is also very promising. Plus, since you do not have to be actively involved with your investment, it’s low-maintenance and offers you a lot of leeway.
That being said, to build an empire, you should first understand how to work with the empire. This means you should find the right passive income opportunity that works for your needs. Let’s see the best ways to build a passive income using real estate property.
Ways to Get Passive Income from Real Estate
Some of the best methods to get passive income returns from rental property are:
1. Get Involved with Rental Properties
Rental property is likely one of the most excellent ways to get passive income with real estate. Nowadays, people prefer to rent rather than buy property, so you will always have opportunities for tenants. You just need to own property in a good area and lease it to others.
2. Real Estate Investment Trusts (REITs)
Real estate investment trusts trade on the stock market exchange and often represent the easiest way to profit from real estate. REITs allow you to become an investor in a specific property or share, bringing you income every time the property/share is traded.
REITS also tend to offer a higher yield while being low-cost. Moreover, real estate investment trusts can be joined through online portals, which is great if you’re a remote worker.
3. Real Estate Crowdfunding
If you have some extra money around, you can invest it in real estate crowdfunding. This means you put your cash into a real estate fund, which other investors will use to buy property. When they do, you will own a little bit of that property without doing anything. After that, when the property appreciates or gets rental income, you will receive returns.
4. House Hacking
Consider house hacking if you have a house and want to generate extra income. For instance, if you have a duplex or a fourplex, you can live in one unit and rent out the others. You may have a garage that could be converted into a livable rental unit.
5. Short-Term Holiday Rental
Short-term rentals are becoming increasingly popular and will make some good passive income. Gone are the days when people stayed with random people or hotels – nowadays, they want their privacy.
Remember that short-term rentals may involve work, as you need to manage them. For example, in the beginning, you may have no other option but to clean the house yourself. However, once you gain momentum and popularity, the passive income should increase, allowing you to pay for a regular cleaning service.
6. Ground Leases
More and more people focus on houses, but they forget about one valuable property type: the land. Nowadays, many individuals prefer to build their dream home rather than buy one. However, purchasing the whole land comes with high costs.
That’s where ground leases come into play. They allow you to generate passive income through the land you own. The pay is indeed lower than it would be for a house, but the risk is also reduced. After all, unless the tenants plan to move their entire home, you will have a source of long-term income.
Side Passive Income Opportunities
With real estate come other opportunities for you to get passive income. Here are the easiest and most profitable options:
1. Sharing Internet Bandwidth
When working with real estate, such as rental properties or house hacking, you can share and generate income from anything inside the house. For example, you can earn free money by sharing your excess network bandwidth with others. Here, you only need a large, preferably uncapped data plan. It’s a great way to earn money, especially if you always have excess data you don’t use every month.
2. Peer-to-Peer Lending
Why stop at real estate when you can broaden your investment horizon? Peer-to-peer lending platforms enable you to lend your money to individuals or small businesses in exchange for interest payments. By allocating a portion of your income from real estate to peer-to-peer lending, you diversify your income streams further. This strategy ensures that your finances remain robust and resilient, even in fluctuating economic climates.
3. Micro-Jobs & Gigs
The advantage of real estate is that it offers you plenty of free time as income comes your way. This allows you to take on various micro jobs and gigs, such as filling in surveys, blogging, virtual assistance, and more. If you have tenants looking for jobs, you can delegate some of the tasks to them and get passive income.
The Bottom Line
As the real estate market grows, it will offer you more chances to generate passive income. You just need to find the method that works best for you. Also, don’t forget the side opportunities that can bring you extra cash.
