If you’re anything like the clients I’ve been speaking with lately, you’re likely in search of passive income streams that yield higher returns than the stock market. There are many different ways you can achieve this. Below you will find a path from active to passive income. Depending on your short- and long-term goals, you may have different interests.
Single Family Properties: Many people choose to start here because they keep their first home and also it can be a lower barrier to entry from a cost perspective. What you do with the property and your ideal property comes from your needs. Are you looking for short term income, long term income, equity building, etc? There are many opportunities for this type of property. Here are a few.
Strengths – here are some options. I like to find a property that needs some work so that I can gain some equity and increase the value of the property. Once I do that, I can obtain higher rent as well as immediate equity. I can use that additional equity to help fund another project or just have it there in case I need to change my plan and sell it. When renting the property, you can make the property a short-term, midterm or long-term rental.
Multi-Family Properties: People choose to start or move to multi-family properties. For 2-4 unit properties, they can still operate as a traditional type of financing which makes it an easier transaction.
Strengths – there is less risk for lost income between renters. You are also looking at less overhead because you have one roof, one foundation, one yard, etc. Many people start where half of the units pay the bills and the other half creates profit. By operating that way, you should always have an income month to month, even during times of turnover.
Commercial Property: People move to this for a few reasons. One is that they are a business owner that wants to own their own building so they have vertical integration in their company. There are several types of commercial properties – office, land, development, and industrial are some examples. When entering this type, you want to know that particular business and/or take partners who know it well. That makes the learning curve much smaller.
Strengths – typically you are more hands off because one of the expenses is usually a property manager. Also, there are typically longer leases so you have more estimated income. If your lease is a NNN (triple net lease) your tenant will pay for all of the repairs/expenses in their units.
Mobile Home Parks: With mobile home parks, you are generally buying the land and slabs for the mobile homes. The mobile homes themselves are personal property.
Strengths – the noise level of this investment is very low. You are really renting the land. In the event that someone leaves without notice and leaves their mobile home, you have the ability to renovate it and resell it or choose to use that one as a full rental.
Storage Facilities: People can choose to invest in storage facilities by themselves or as an investment group. These are one of the most passive real estate investments you can own. There are different levels of facilities that provide different services to the consumer and have levels of profits and expenses accordingly.
Strengths – these are very passive investments. If you purchase the right one, there is an opportunity to expand or add extra amenities that could also increase your income and value when planning an exit strategy.
Real estate investment offers plenty of ways to make passive income that can outshine the stock market. Whether you start with a single-family home, move on to multi-family units, dive into commercial properties, explore mobile home parks, or invest in storage facilities, there’s something for everyone. Each option has its own perks, from boosting property value to securing stable rental income. As you journey through these opportunities, you might find your niche or mix things up with strategies like 1031 exchanges. Just understand each choice, align it with your goals, and enjoy the ride toward financial growth!
To embark on your real estate investment journey with confidence, remember I’m here to assist you every step of the way. Reach out today to start maximizing your investment potential!