This guide will help you learn about some types of real estate passive income sources and how they work. This should give you a better idea as to which one is best for your needs.
What Is Passive Income?
Passive income is a type of income that you regularly earn without doing anything extra to maintain it. Real estate is one of the best ways to produce this kind of income. Here are some of the most common passive income methods using real estate:
Single-Family Rentals: This is a single-family house that you rent out. You can do repairs and maintenance yourself to save money or pay someone else if the work is too difficult for you.
Multi-Family Rentals: Another way to earn passive income is by purchasing multi-family properties. As the name suggests, you purchase a single building and then rent out different units. This can be an apartment complex or houses that have been converted into rental units.
Vacation Rental Properties: This is a type of rental property that you can use for vacations. You rent it out to people who want to go on vacation during the off-season. It is best used in beachfront or touristy areas where tourists are likely to visit and stay in your rental unit while visiting the city.
Storage Facilities: Another option is to invest and operate a storage facility. People need to store their belongings somewhere, after all. This provides you with an opportunity to rent out a space for them.
REITs and Funds: You can invest in real estate investment trusts (REITs) and funds if these options are too complicated for you. These properties are professionally managed while you sit back and collect the rental income.
The Benefits of Rental Income
Rental income is different from other types of passive income in that it provides you with a steady stream of cash flow. You will be earning money even when you are not doing anything.
Another benefit of this type of income is that you do not rely on a single source. You will earn money from different properties and tenants, especially if you decide to buy multi-family buildings. This should lessen the risk of negative situations, such as getting sued or tenants skipping out on the rent.