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The ultimate guide to generating passive income from real estate


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Summary List Placement

Investing in real estate is a great way to generate passive income, not least because there’s more than one way to do it. 

The goal of passive-income generation is to create an income stream for an investor that is inherently, well, passive, with the investor not having to do much after the initial outlay to keep the money coming in.

Collecting rent is the classic example, but there are many real-estate strategies you can adopt to start bringing income in passively.

In the US, real-estate ownership has long represented financial freedom and the opportunity to build generational wealth — in a recent Gallup survey, 35% of 1,012 US adults polled said real estate was the best way to build wealth over the long term.

There’s a good reason for this widely held belief: Compared with other asset classes, real estate can perform best. Expected annual total returns on apartment investments have fluctuated between 6 and 15% since 2012, according to the National Council of Real Estate Investment Fiduciaries, while over the same period, the S&P 500 had an annualized return of about 10%.

From landlording and wholesaling to other strategies, investors can secure profits passively in more than one way, depending on just how involved they want to be in the project and how much time and capital they have to invest. 

So to help you get started, we’ve outlined the top strategies real-estate investors can use to maximize profits, minimize their workloads, and scale their portfolios up, ranked from most to least passive.

Landlording

Landlording is when a property owner rents out apartments to provide housing for tenants.

One of the most common misconceptions of landlording is that you need money to get started, but that is far from the truth.

Just take Sam and Daniel Kwak, known as the Kwak Brothers, for example. The two scored their first rental deal in 2017 — a portfolio of four single-family properties in Illinois — and they did it without having any money of their own to invest. Instead, they raised capital from prospective investors who didn’t have the time or interest of seeking out good deals themselves.

“One of the biggest myths that people have is that they need money to invest,” Daniel Kwak told Business Insider. “We had absolutely no money to do deals, but, you know, I noticed that I was very good at networking. So I would literally go around asking people, ‘Hey, what’s the No. 1 challenge I can help solve for you?'”

Through this method, they accumulated 75 rental doors by the end of 2017.

But making a real profit via landlording goes far beyond just buying up homes.

The key to generating passive income through landlording is to build a portfolio with multiple properties. Through the income earned from those properties, owners can then hire property managers who handle day-to-day duties. With enough scale and the right team in place, landlording is nearly the ideal the passive income stream.

Getting the math of this equation right …read more

Source:: Business Insider

      

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