These are the three ways to make passive income with real estate.
I wanted to talk today about investing in income-producing properties and ways to make passive income through real estate. There are three major ways to do this, three major types of properties or methods that you can purchase real estate and make money for passive income.
The first is probably the safest and easiest way to make money through real estate: buying properties to rent. You can purchase long-term rental properties, a duplex, a multifamily, or a single-family home. It’s a good, safe way to have a long-term rental situation, typically either a 12 or 24-month lease where you’ve got somebody there who’s paying you rent, and you’re gaining equity. Over time, you have a bunch of equity in that home. Of course, there are some risks associated with this. You just want to ensure that your cash flow situation will be positive. You have to look at if you’re taking a mortgage, what are other monthly expenses, and future maintenance items. There’s a budget and a formula that we use to help you map that out.
The second way is through property flips. This is something that we see glamorized on TV all the time. You can make a ton of money through flipping properties, but it’s also very risky. Ensuring you’re buying a property with enough room for a profit is crucial. But then also you need to have a crew of people ready to go; a general contractor or independent people—plumbers, electricians, flooring, people ready to go because the timing of a flip is important. Getting that house market ready and on the market as soon as possible is crucial, so there is a risk there.
And then the third way, and I think the most popular way these days, is Airbnb or short-term rental situations. There are a lot of people, like investors, that have shifted and are now investing in short-term rentals. You would buy a property in a resort community, a ski community, a beach community, or near a national park or a big city where it would be popular for people to go on to a website and rent the property for a weekend. I’ve met many people who have properties across the country, and it’s nice because, as the owner, you can use those properties for yourself too. That’s becoming popular, and I have some experience with that too.
Those are the three major ways to create passive income, create a real estate portfolio for yourself, and make money through real estate. If you have questions about buying, selling, or investing, please reach out to us at any time. We’re here to help.