What is passive income in real estate investing
What is passive income in real estate investing. Passive income real estate is known as one of the best ways to gain an additional source of revenue, attain security in retirement, and ultimately design a roadmap to achieving financial freedom. However, passive income real estate investing is not necessarily the right fit for every investor.
What is passive income in real estate investing. Passive income is money that you earn without a regular daily time investment. Creating a passive income stream from rental income involves work upfront but allows you to reap financial rewards for years to come.
One common passive income stream is real estate investing and rental management. But is owning a rental property right for you? Being a landlord is work, especially in the early stages. That’s when you’re choosing your properties, undertaking necessary renovations, and learning the ropes.
What Is Passive Income from Rental Property?
Creating passive income in real estate usually involves buying a property and renting it out to tenants. Managing rental properties can be an excellent way to earn money. Why is rental income considered passive? Because the IRS says it is. It’s grouped with income streams like royalties and licensing. And it’s a good thing for real estate investors, because it allows them to avoid the self-employment tax.
Why Do You Need Passive Income?
Passive income is a great way to earn money without having to actively work for it. Collect passive income while you enjoy your life Instead of spending your day working for someone else. Here are some ways you can put your passive income to use:
- Fund your children’s college funds
- Set up and build your retirement fund
- Pay off your debts
- Achieve financial freedom
- Build your savings
With short-term rentals, you can often charge more on a nightly basis than you would with longer-term tenants, and you don’t need to spend time chasing down rent. If you use a third party, such as Airbnb, for short-term rentals of a property you already own, you can earn money relatively passively.
Airbnb isn’t your only option. There are competitors, such as Booking.com and TripAdvisor rentals, but Airbnb is the clear leader. The average Airbnb host makes about $924 a month and in some countries Airbnb Host Guarantee program gives you protection up to a million dollars in damages if guests aren’t thoughtful. Most full-time Airbnb real estate investors started out by using Airbnb as a part-time side project. You can even rent just a room in your home, rather than an entire house or apartment.
Real Estate Investment Trusts (REITs)
A real estate investment trust (REIT) is a company that owns income-producing real estate and pools investors’ money to gain and manage real estate properties. Typically, REITs are high-end or commercial properties, and they can fluctuate in correlation with the stock market.
REITs allow you to invest in the real estate sector in a completely passive manner as you essentially own a share of the fund. The rental payments pass through to REIT owners on a monthly, quarterly, or annual basis. People who invest in REITs receive dividends in the same way you receive dividends from certain stocks and these returns are usually higher than most other stocks.
About The Jackie Jackson
Jackie Jackson is a Real Estate Coach & Investor, helping investors at all levels create profits and increased cash flow through Tax Deeds & Tax Liens Real Estate Investing. Jackie is the CEO and founder of Tax Deed Genius, the #1 Step by Step National Tax Liens & Tax Deeds, Surplus Overages Training Course for New and Seasoned Real Estate Investors. Learn how to buy properties for pennies on the dollar at deep discounts from local county public auctions. Sign up today click here.