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For many people, being able to earn passive income is the holy grail of financial independence. The thought of earning money while you sleep is incredibly alluring, no doubt. And although there are innumerable ways to create streams of passive income, each way has pros and cons that can make some a better route for you than others.
Essentially, passive income is earning money at a rate that’s decoupled from work. Most forms of passive income take at least some work up front, even if it’s only researching the best strategy. Others, however, can involve much more effort and time than many investors would prefer.
To help you understand some of the common types of passive income, along with their misconceptions, we’ve put together this article to give you a general overview.
There are numerous ways people can generate passive income, each with varying degrees of passivity. This means many people can access ways to earn passive income. Just remember, not all forms of passive income are simple to establish or maintain, so be sure to do your homework.
Some of the most common types of passive income include:
The reality is, passive doesn’t necessarily mean no work at all. Although some passive real estate investment options such as rental properties and real estate funds require little to negligible effort to get started with, there’s always some work to account for.
Whatever method of bringing in passive income you chose that’s related to real estate, whether partnering with a more active investment partner or buying shares of a fund, each comes with some time demands for the proper due diligence for more security in achieving your investment goals.
While it’s true that choosing to simply invest in a real estate fund requires the least amount of time, it’s crucial to be certain of how the fund managers plan to execute on their real estate deals to ensure they’re well-aligned with your investing objectives.
The returns you can expect from passive real estate investing, like most investments, varies tremendously depending on many factors. That said, on average, passive real estate investing in funds delivers returns in-line with their levels of risk and involvement required.
Returns may be slightly lower than more risky types of real estate investing, but most investors find the security and risk-mitigation benefits of passive real estate investment funds more than compensate for this, along with the benefits of diversification.
As far as the real estate category of passive income goes, a fund is sort of like a mutual fund for stocks. You invest your money into a single fund, but there are multiple assets that are pooled together to provide an average rate of return on your investment.
The major benefit here is that you often get a fixed rate of return for a set number of years that can be paid out in monthly or quarterly payments or simply reinvested to increase your overall returns.
If you think passive real estate investing could be your best move, it’s wise to consider some key questions for evaluating any type of investment.
REITs enable hundreds and sometimes thousands of investors to buy into a collection of real estate properties similar to how people invest in stock index funds that are a piece of many assets sold as a single share.
REITs make it possible for investors to acquire properties that would otherwise be totally out of their financial means to access. Investment shares in most REITs can be publicly traded, which comes with the advantage of typically higher liquidity than other methods of Real Estate Investment.
One drawback of REITs is that you’re only a number in a sea of thousands of investors, so your experience will often involve less detail in reporting compared with a real estate investment fund from Saint Investment Group.
Earning income through investing in a real estate fund can be one of the most passive ways to generate income from real estate. Similar to the consistent income you get from owning rental property, a real estate investment fund can provide you with a steady, dependable stream of passive income.
The benefit is you’ll enjoy a much lower amount of risk, not to mention physical work, with a fund than direct rental ownership. Real estate fund operators are professionals who handle every aspect of investment property ownership, removing the burden of tenant transactions and maintenance hassles.
Many investors seeking passive real estate investment opportunities are largely interested in diversifying their existing portfolios of stocks and bonds. Depending on your investment objectives, especially how soon you’ll be retiring, you should allocate your capital accordingly. The seasoned experts at Saint Investment are here to help you determine the best capital allocation strategy for both your short-term and long-term goals.
If passive income from real estate with the least hassle is what you’re after, reach out to a team of real estate experts that will scrutinize every real estate deal for you. Saint Investment Group is here to help you get started today. We deliver detailed reporting and deal transparency, helping you earn passive real estate income with peace of mind. Call (323) 483-0291 today to learn how to get started.
Earning passive income necessitates considerable effort and investment in obtaining and sustaining the assets responsible for generating the income. Despite being less demanding than a regular job, it still demands a significant amount of work.
No, even passive income requires some degree of management and oversight to ensure that the assets generating the income continue to perform and produce revenue.
No, earning passive income requires significant time and effort to acquire and develop the assets necessary to generate recurring revenue streams.
It is possible for passive income to ultimately substitute a full-time employment, but usually acquiring the assets required to produce a sizable income source takes a lot of time and effort.
No, all forms of income carry some degree of risk. Investments that generate passive income can be subject to market fluctuations and other economic factors that can impact their performance and revenue generation.
A master in Investment, Marketing, and Capital Raising.
Nic has honed his focus on the Real Estate and debt markets with Saint Investment Group and pursues large-scale Distressed Asset purchases with his partners and syndications.
