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Let's talk about passive income through real estate

I overheard the couple ahead of me in line talking about passive income through real estate, comparing real estate to other methods of passive income. Well...  I just had to jump in the conversation. And this is what we discussed while waiting our turn.

Why is passive income important?

If you plan to retire, or have any life outside the cubicle, you'll need money coming in every month to pay the bills. That's what passive income can do for you. It's income that is "passive", meaning little or no work is demanded of you to earn it.

That's because I have seen people I care about lose their life savings to the stock market.  And the bonds I had previously invested in weren't anything to get excited about, since they appreciated ever so slowly that I actually lost money due to inflation. 

There is no better return on your investment than what real estate offers. Even Bitcoin is a roller coaster these days. But real estate can bring you passive income for life, and a healthy appreciation that typically outdoes inflation. 

Visualize passive income through real estate

This quick sketch illustrates the value of having many streams of income. Passive income with real estate is important if you want to enjoy of what life offers.

Social security income is ok, but it certainly doesn't keep with with inflation. And it's not a real retirement plan. Having money you can depend on deposited to your account is not just a luxury, but a necessity. I've never heard of a landlord being fired, have you?

This quick sketch illustrates how you could enjoy passive income through real estate with just one property working for you. When you add additional properties, your passive income paycheck multiplies wiht each new investment property you own and rent.

With this example we are using a general NOI (net operating income) of $1,000 per property, per month.

Starting with one, rental property and adding more and more (and more!) rental properties can give you peace of mind like nothing else.

Say goodbye to long hours at work 

If you are tired of working long hours for a paycheck, it's time to seriously consider investing in real estate. It's possible to find rental homes with little or no money down. Some new investors start off partnering with others, and as the property grows in value, they sell and either re-invest together, or start their own individual portfolios.

Turn key rentals means stressless investing

It is possible to buy turn key rental houses. These are properties that the current landlord(s) are willing to sell which are in good condition, and have good tenants already living in them paying rent -- month after month. 

There are several reasons that a landlord would part with their passive income producing real estate:

  • The landlord has or is planning to move out of the state or area.
  • The property is in probate, and the heirs need to liquidate it without disturbing the tenant.
  • The current owner needs to cash out for personal reasons.

Here's more information on investing in turnkey rental properties, you may be interested in.

Can you spot the misconceptions here?

Stock market vs Real estate investing

Comparing real estate investing to investing in the stock market, comes up frequently. Both methods of investing will bring passive income, however the stock market needs babysitting daily. 

Once I had a stock broker managing my funds at Scottrade, and I discovered (too late) that when the market dipped, he had Carte Blanche to make trades on my behalf. What a mistake I made, giving him authorization to my account.

The only person who came out pretty good was the broker, since he made a commission on every trade.

Now with my rental properties, I have full control over the properties themselves, the income they bring, and who lives in my rentals. There is very little hands-on to owning investment properties. And if you hire a trusted property manager, that little hands-on goes down to pretty much none. A phone call now and then for updates, is pretty much all. 

How quickly do you need to cash out?

 From my experience, both offer their own list of pros and cons. Passive income through real estate rental offers much higher returns, overall. Plus, added appreciation year after year. However, they do need managing. And they are not as quickly liquidated if you need fast cash. 

Investing  in the stock market is fun, and you can draw your funds out as needed. But they need watching like an infant. You could lose your entire portfolio in one afternoon -- but then  it could double, too. It's a gamble, for sure.

I prefer the less risky path of owning something I can see and feel. When has anyone ever driven by their stock portfolio? Landlords have the ability to visit their properties any day and know that their investment is working for them.

What are your investment goals?

best rental property investment books

Wholesaling real estate is a great way to get into the real estate market. You can work when you have time -- of course , like most things in life, the more you put into wholesaling, the more you'll get out. And you can start with out any investment up front, then use your earnings to passive income through real estate rentals.

Learn more about wholesaling real estate here.

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