Creating Passive Income from Real Estate Investing

Investing in real estate comes in many flavors with varying degrees of time, effort, commitment and investment. Real estate investing offers opportunities for both passive and active income which you can start making consistently and quickly when done properly. 

Some ways you can invest in real estate involve more risk than others.  Your options will depend on your level of capital available, time availability, investment time horizon, among other factors.

Should You Invest in Real Estate?

Remember that any type of investment comes with risks and passive income can still involve a bit of upfront work. However, relative to other investment types, most types of real estate are generally considered safer options. 

How to Make Passive Income from Real Estate Investing

1

The most common method for real estate investing when considering the investment opportunity is from directly purchasing a property and renting it out to tenants. 

Direct Ownership and Management (or with 3rd-Party)

2

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. 

Short-Term Rentals

3

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. 

Real Estate Investment Trusts (REITs)

4

Another way to create passive income through real estate is by creating or purchasing a mortgage note. You can buy performing and non-performing mortgage notes from other investors, commonly with a small discount. 

Mortgage Notes

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