Are you looking for a passive income source? Did you know you can utilize your real estate properties to generate a good passive income? In this article, we explore the top ways to generate passive income from real estate, i.e. turn your properties into a source of income.
What’s a passive income?
Passive income is a type of income generated from sources or entities where you’re not actively involved.
Dividends, for instance, are generated from stocks you have invested in. They are paid automatically and regularly irrespective of whether or not you’re actively managing your stocks.
Another example of passive income would be rent income. You own a second house that you have rented and receive a monthly rent on it. Then, it’s your passive income.
On the other hand, active income is generated from your activities, which can be a job, business, or something else.
Passive income from real estate
Real Estate is a great way to generate passive income, where you can get paid regularly without being actively involved. Besides rental income, real estate investment trusts (REITs) and real estate NFTs are other popular ways to earn an income from your property investments.
Starting with real estate passive income creation
The first step to earning a passive income from real estate is to invest in a property that can generate money for you. Most real estate investments require you to invest a hefty amount initially to buy a property that can generate a recurring income for you. However, this is different with real estate NFTs, through which you can start earning by investing a very low amount initially. We’ll discuss more about it next.
Top ways to generate income from real estate
Sell A Property
The most obvious way to get money from your property is to sell it. But, of course, that’s not the right option in every case, especially when you’re actively using the property in question. If you have a property that you’re not actively using and need urgent money, selling or mortgaging it might be a viable option in some cases.
Rent
One of the best ways to make passive income from a property is to rent it. There are multiple ways and options for it. If you’re actively using this property, like a house you live in, you can still rent a part of it, like a room, to generate rent from it. This can, however, be an active-passive situation since you’ll be sharing your accommodation with another person and may need to be actively involved in maintenance and other things.
If you’re planning to purchase a property for side income or already own a second property, the two best options to make money from it include short-term vacation rentals or long-term rentals. Short-term vacation rentals work like Airbnb, where you rent your place to a person for a short period, usually a couple of days. Long-term rentals are better since you can earn a steady income without needing to constantly look for tenants for your property.
NFTs
Real Estate NFTs are relatively newer to the space. These refer to properties that have been tokenized on the blockchain and can be purchased through NFTs (non-fungible tokens). The benefits include low up-front costs, higher security, rental income, and value appreciation.
Real Estate NFT marketplaces such as BitStake are a good place to start. Find a tokenized property that fits your bill. You can start with a very low amount since you’ll only be purchasing a fraction of the property. The average range is $A100-$A500. Once you invest in and own your property NFT, you can start earning an annual yield (rent) in the range of 11–12%.
REITs
REITs or real estate investment trusts (REITs) are particularly popular among millennials and the Internet generation that invest in stocks. These funds invest in top real estate projects around the world, allowing participants to access and benefit from world-class real estate with a regular income in the form of dividends. There are many options, including direct REITs, REIT mutual funds, and REIT ETFs.
Land Lease
Finally, leasing your land property is also a good way to earn a side income. Many businesses seek unoccupied land for various uses, such as parking, events, and others. You can lease your land for short periods to credible tenants for good income.