One of the reasons for investing in real estate is because asset price generally keeps appreciating and promises good returns. Whether you flip houses or add rental properties to your investment portfolio, you would always gain something, although the return percentage might vary. Rarely would you make losses from real estate investment unless you choose the wrong time to sell your property, as might happen under duress? To protect the investment and ensure good returns from the property, you must maintain it well to remain attractive to buyers or renters – you can also ensure you’re getting the most out of your investment with a tax depreciation schedule. You can provide a stable income stream by investing in real estate and becoming prosperous over time. Some people even leave their jobs to earn a living from passive real estate investments. But, what is passive real estate investing?
What is passive real estate investing?
As told earlier, to earn from real estate investments, you need to maintain the property well and even look after the interest of renters for rental properties. In simple words, real estate management or property management is an essential part of real estate investment that impacts the return to some extent. Well-maintained properties with better amenities will provide higher rentals and return on investment. The kind of involvement of the investors in maintaining the property and looking after its operations determines whether you are an active investor or passive investor. If you hire the services of a property manager to manage your property, then you are a passive investor. Many people take to passive real estate investing because it takes away a lot of headaches while ensuring a decent return on investment.
The role of a property manager
Property managers are central to passive investing in real estate. You can hire the services of an individual professional or a company to look after your property and play the role of a property manager. Property managers are solution providers for real estate investors who depend on their services for the upkeep of the property. Real estate investors who want to generate passive income from the investment appoint property managers. Popery managers look to maintain the property, deals with tenants and other property owners and owners’ associations if it is a gated community, collect rents, pay taxes, and ensure adherence to the rules and regulations. The trend of hiring property managers is especially prevalent among institutional investors.
Property managers coordinate all activities related to building maintenance and even supervise the work, might do light cleaning work or the work of a handyman. They attend and resolve tenants’ complaints and concerns, show and lease vacant units, arrange for advertising, collect and deposit rent. Above all, they regularly communicate with the property owner and update them about the status of the property.
Making better use of time
One of the reasons for choosing passive real estate investment is to make better use of time for doing more meaningful and satisfying work than looking after the property. Many passive investors pursue other professions while earning from real estate is a side income. For them, engaging a property manager is a must. They rely on the property manager to maintain a steady stream of passive income while taking up some other profession to boost their income. Investing in real estate is a way to become rich quickly, as the steady stream of income from rentals allows property owners to invest in other areas without worrying. A good facility maintenance program, such as Facilitron’s work order system, can streamline the process.
Real estate investment trusts
To diversify the investment portfolio in real estate while maintaining a steady stream of passive income, you can invest in real estate investment trusts (REIT). The trusts are companies that invest in real estate and operate like mutual funds. Some trusts directly buy properties that have the potential of providing good returns. Some other trusts invest in mortgage-backed securities, real estate debts, and mortgages. Investing in a REIT is an indirect way of investing in real estate that provides a steady stream of passive income to the investors. Small investors who want to generate passive income without high investment in real estate can invest through REITs. It is the most worry-free way to invest in real estate with assured returns.
Now that you know what is passive real estate investing you will find more reasons to invest in real estate. You can decide to do even more research on the topic.
