New households form at a rate of around 1 million per year in the United States. While this is down from pre-2008 levels, it has pushed the national housing market forward. New construction still can’t meet the demand for family homes.
It’s one reason real estate prices have been rising again. Many people are now turning to buy, renovating, and selling homes to cash in on rising demand for homes. Investing in real estate has once again become an excellent idea.
You might think making money from real estate means you have to flip houses and find buyers. There’s actually a better way. You can earn income with passive real estate investing.
With this form of investing, you don’t need to spend your weekends scouring the market for properties to flip or having open houses. You also don’t have to rent out the property and find spend time finding tenants. Passive investment is the solution for those who want to invest in real estate, but don’t have time.
1. Crowdfunding Makes Passive Real Estate Investing Easy:
One of the ways to invest in real estate is to look for crowdfunding opportunities. There are several different platforms that match potential investors with investment opportunities.
The beauty of crowdfunding opportunities is twofold. First, they lower your risk, since you’re not shouldering the buying of property by yourself. Next, they often have low thresholds for buying into an investment.
Be sure to do your research before investing. There are many opportunities out there, but not every company is a great partner.
2. Consider Investing in REITs:
Many crowdfunding opportunities invest in real estate investment trusts, or REITs. The company that operates the platform may also operate as a REIT itself, although not all do.
A REIT is something like a mutual fund. The REIT holds various properties within its portfolio. You invest in the property portfolio and earn returns on that investment.
REITs help diversify your real estate holdings, which lowers your risk. They can be publicly traded securities, or they can be non-traded. A traded REIT can be purchased like any other investment.
3. Go the Traditional Route:
You can also make real estate investments the traditional way: buying property yourself. If you want to turn these into passive investments, consider rental property purchases.
A rental property isn’t all that passive, as any landlord knows. Tenants will call with problems. You’ll need to find tenants, since letting your investment sit empty doesn’t create income.
One way to make real estate more passive is to work with a property management company. They’ll deal with the day-to-day issues tenants experience. You can reap the rewards.
4. Peer-to-Peer Loans Offer Another Avenue:
Peer-to-peer loans are often forgotten among real estate investment ideas. If you have the capital, you could loan to other investors or real estate purchasers.
This isn’t real estate investing in the strictest sense. It is often a service you’ll see on real estate crowdfunding platforms. You can earn income by collecting interest on the loan amount.
5. Diversify Your Portfolio:
We’ve already mentioned the idea that REITs invest in many different properties to cut risk. You should adopt this same strategy for your own passive real estate investments.
Consider different types of properties, as well as different kinds of investments. Putting all your investment money into a single REIT is a risky strategy. So is putting all your money into a single expensive property.
If you can, consider small real estate investments. Multiple REITs and low-cost properties will give you a more robust strategy. Adding loans diversifies even more.
Be sure to also invest in different kinds of properties. Houses may be the first kind of property that comes to mind. Don’t forget farmland and commercial property can also be rented.
6. Look for Turnkey Properties:
As you become involved in real estate investing, you may notice many properties are advertised as turnkey. Relatively few of these opportunities are true turnkey properties.
A true turnkey property is an excellent opportunity to get into the rental market. You can read more here about how a turnkey property works and how it could benefit your portfolio.
7. Pay Attention to the Market:
If you want to invest in real estate wisely, you’ll need to pay attention to the market. Right now, the market is slowing down, but it still appears to have an upward trajectory.
There are always hot spots and cool areas in any market in the United States. This is especially true when it comes to the real estate market. Properties in fast-growing cities like Austin and Odessa, Texas, will see more demand.
By contrast, shrinking cities across the Rust Belt may have more attractive pricing. The catch is you won’t be able to get your money’s worth out of these properties.
8. Create Goals and Make a Plan:
If you want to make money with passive real estate investing in 2019, you’ll also want to set some goals and make a plan. How much do you want to earn?
Next, you’ll need to determine how you’ll reach that goal. Be sure to consider the resources you have at your disposal. If you want to make $5,000 per month, you’ll need to achieve a certain investment level.
Your plan creates a roadmap for achieving your goals. It should include actionable steps, such as investing in a REIT or buying property.
Start Your Investment Portfolio:
If you want to start earning, there’s no better time to start with passive real estate investing than right now. You can talk to a broker or other real estate experts to begin crafting your portfolio.
Real estate isn’t the only kind of investment you might want to consider. If you want to earn more in 2019, take a look around our site. We have plenty of tips and tricks for saving and earning.
With great advice and good planning, you can make 2019 your best-ever financial year.