How’d you sleep last night? Good? How much money did you make while catching up on your beauty sleep? If the answer is a big, fat zero, it’s time to start talking about generating passive income RIGHT NOW.

Keep reading to get a plan in place today to start making money while you sleep.

What Is Passive Income?

Passive income is the key to financial success and investing in real estate rentals is a great way to generate it. Since you have the inside track on real estate, you’re incredibly qualified to be successful in this investment. Not only can you make a healthy return on it, but you can also take advantage of tax breaks and other incentives available to landlords.

So, investing in real estate might be the perfect solution if you want to make money while you snooze, aka passive income.

How Do I Start Investing?

Investing in rental property can provide a passive income stream option to help cover your essential living costs. Choosing the correct type of rental property for your investment is important, as each has different potential returns and risks. The most common types of rental properties and their potential returns include but are not limited to:

  1. Single-family homes: These are the most common type of rental properties and typically offer higher returns than other types of rentals. 
  2. Multi-family properties: These can be more complex to manage but often offer a higher return on investment because they tend to have a higher occupancy rate. 
  3. Commercial property: This type of rental can be more challenging to manage but often offers good returns because of the high demand for commercial space.

Is There More Than One Way To Invest?

Yes! There are many different ways to invest in rental properties. One quick and easy way is to keep an eye on listings and auctions to find a property that will provide you with high returns on your investment. Another way is to invest in a property that has already been rented out and is currently providing returns for the current owner.

Many online resources can help you get started in the world of rental properties. Whatever route you choose, it is par for the course to do your research and understand the risks involved in this type of investment.

How Do You Decide Which Property To Invest In?

I have been investing in rental properties for over 20 years. When I decide whether or not a property is worth my time and money before I get a return, I evaluate its EOP. I recommend you take a similar approach.

  • Equity
  • Opportunity 
  • Potential

What Are the Major Pros of Rentals?

There is a bounty of potential benefits to investing in rental properties. One of the most obvious is that it can provide a steady income stream and help you better secure your financial future. The examples of rental property returns are passive income in the truest sense – you put in the work upfront and then enjoy the benefits for years to come without lifting a finger.

  • Professionals can help manage the property, so you see a consistent return on your investment without labor 
  • Rental properties offer stability and security for your money, as well as potential tax breaks
  • Returns in the form of monthly rent checks so long as tenants occupy the property

What Are the Major Cons of Rentals?

There will always be people who are hesitant to invest in rental properties for a number of reasons. Firstly, there is the issue of risk. Rental properties are a big investment and with big investments come bigger risks. There is a potential for big returns but always the potential for big losses if you are not calculated when investing. Remember that real estate is cyclical, and prices can go up and down quickly.

  • Time and resources to manage your property — including finding and screening tenants, collecting rent, and fixing any problems that may arise
  • Costs to manage your property — you’ll be getting checks every month but remember to deduct your expenses, including mortgage payments, property taxes, insurance, and repairs/maintenance
  • Risks and losses to your property —tenants and natural disasters may damage the property, or tenants may stop paying rent, which could lead to significant financial loss

Property Investments Kickstart Passive Income

When it comes to investing, real estate is always a popular option. Rentals are a good start in investment properties to generate passive income. Plus, when you rent a property, you become a landlord – something that can come with its own set of rewards (AND risks!). For instance, you may be able to take advantage of tax write-offs on things like repairs and maintenance costs.

You should also know that rentals are one of the best ways to generate passive income. Renting out property can be an excellent opportunity to bring in steady returns monthly for as long as you rent out the property. That’s not too shabby for bringing in scratch while you sleep!

About the Author Meleah Jones

Hi, my name is Meleah Jones and I'm on a mission to help motivated realtors just like you! With 20 years in the real estate business, I've been blessed to build a powerful network of people and resources to help build your confidence and legacy in the real estate industry.

I won't stop until you're no longer just surviving but thriving in the real estate market.

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