It’s been estimated that real estate investors in the U.S. make an average of $75,000 a year. And when you look at the skyrocketing price of real estate and the common sense adage that “Everyone needs a place to live.”, it’s not hard to see how real estate investing has become the financial equivalent of a can’t-miss investment strategy.
How can you keep your portfolio thriving and surviving when you’re looking at passive real estate investing? Can you put down the hammer and still generate steady real estate income? Keep reading to see our top three passive real estate investment tips.
1. Figure Out Your Investment Vehicle
At this stage, everybody knows about how short-term flipping and commercial real estate investments can generate major returns for active real estate investors. But did you know that passive investors have a few money-making options at their disposal?
REITs, or real estate investment trusts, can offer extremely high yields through your broker. But it’s also possible to pool your funds with other investors or lend money to active investors.
Some people opt to invest in REITs because they’re easily accessible. Others initially invest in real estate through stocks or more active methods before eventually getting into crowdfunding and hard money lending. Either way, however, you’ll want to create a detailed and robust plan for your real estate investments.
2. Create a Long-Term Financial Plan
According to CNBC, by the age of 30, most people should have the equivalent of their annual salary saved. Even if you got your financial start a little later in life, however, it pays to have a robust financial strategy that’ll let you grow your investments without having to sacrifice your mortgage money or your groceries.
In addition to your general monthly budget, you’ll also want to think about the tax implications of the way you’re structuring your funds. For instance, if you’re not using your brokerage account for your real estate investments, it may be in your best interests to hold and manage your funds through an LLC. If that sounds like you, there are lots of places where you can find more info.
3. Have an Exit Strategy
It’s a few years down the line and your loved one is looking at a long-term hospital stay. Or maybe the loan isn’t working out or you’ve had the bad luck of purchasing an underwater mortgage.
What do you do?
Passive investing may be known for its stability as an investment medium, but, even so, there are no guarantees. For this reason, you’ll want to consider defensive strategies that will allow you to protect your investment portfolio as needed.
Use These Tips For Passive Real Estate Investing Success
If you’ve got family obligations and a day job to consider, passive real estate investing makes it possible for you to enjoy the financial benefits of having real estate investments without having to put in the time and work that’s often required to renovate properties or flip them. And thanks to the advice we’ve just provided, you can position your passive real estate portfolio for success in less time than you think.
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