HOW TO MAKE PASSIVE INCOME FROM REAL ESTATE
Passive Income, the more relaxed cousin of Active Income, is income that you earn regularly without working to generate it. It’s the dream of anyone who wants to retire from work, having this kind of income coming in regularly, without working.
But this “without working” is a little myth, because it is statistically proven that most people continue working or doing various activities and after they get to have such passive income enough to live their daily life.
It is therefore more about the relaxation and security that this passive income gives you, rather than the desire to give up work.
An excellent source of passive income is real estate investments. In this article we will review 4 ways you can earn Passive Income from Real Estate:
- Buy and rent
This is the first and simplest method, used all over the world, and increasingly in Romania. We have covered this topic in multiple vlogs on the Youtube channel of Daniel Tudor, CEO of our company. You can watch it especially if you are interested in real estate investments.
In order to buy and rent, it is very important to calculate your Passive Income in relation to your Net Income and not to get drunk with your Gross Income.
Net Income is what you have left over after you take out tax and operating costs (insurance, maintenance, repairs, marketing, etc.) from Gross Income. Net Income is therefore your Passive Income.
- You invest early in reliable real estate developments
What is an early investment? You can find it in different forms: Pre-Sales, Pre-Construction, Off-Plan, Early Stage.
The basic idea is to buy at the early stage of the development, when your down payment is so important to the developer that he is willing to give you a discount or already has the price set so that you get a great price. You can find a multitude of such options with us.
Passive income comes from the profit you make on reselling the property at a higher price when it is ready. To make it 100% Passive Income, ask your consultants if they can facilitate this resale at the end.
If the resale price is not satisfactory for you, you can always choose to rent it out and you are back to point 1.
- Invest in property development companies
Such investments are targeted by more sophisticated investors. Basically you invest by buying shares or by joining real estate development companies with active partners in the field.
It is basically an equity investment, but has the advantage that it will be backed by a real estate asset. The passive income will be from the dividends you will ultimately receive from the profits of the development.
- Invest in real estate investment trusts
For even more sophisticated investors, these types of trusts are a “gold mine”. They are also called REITs or Real Estate Investment Trusts and are basically companies or funds investing in income-generating real estate assets.
Your investment is still an equity investment where you will own either shares or units in the vehicle. You can find these REITs listed on various stock exchanges around the world, in Romania there are still no REITs listed. Again, the passive income comes from dividends from the profit of each fiscal year.
Write to us on social media if you want to know more about investing in real estate development companies or real estate investment trusts. You can find us on Facebook, LinkedIn, Youtube, Instagram and, more recently, Tik-Tok. We’ll be happy to respond.
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