Passive income is defined as a form of income you receive when you’re not actually working for it each day.
There are lots of different types of passive income that you will definitely benefit from in the long run, like writing an e-book, selling your belongings online or renting out your property on Airbnb.
All of these are wonderfully simple ways of making money without working a 9-5 job. And wouldn’t we all enjoy that!
However, one of the most lucrative ways to earn passive income is through investing in real estate. Whether that be buying an investment property, renting out a unit or listing a holiday home on Airbnb. Some people are in a position to build a property portfolio or even buy and sell houses quickly, a process called flipping houses. These are all excellent forms of passive income and ones that don’t require a great amount of effort or time to organise.
Passive property investing is a great form of income that could potentially set you up for retirement but there are a few important things to consider before biting the bullet. Just like most investment situations you can’t expect to be making a profit overnight, if you’re lucky you will see financial improvement within a few months. In some cases, the investment might lose money.
Here are some ideas for investing your passive income in real estate
Renting out your property.
This is a fairly simple process if you’re already on top of repayments. If you have lived in the property for at least 6 months prior to renting it out, you may also still be eligible for the First Home Owners Grant.
Once you’ve decided to rent out the property you have a number of options. A property management company can assist with leasing your property and managing the day to day issues of collecting rent and maintenance. This mean whilst you benefit from the weekly or monthly rental payments you have little involvement in the property management.
The optimal situation would be if you can find cheaper accommodation for yourself, like moving back in with your parents or relatives, you are able to reap the rewards of passive income. Your tenant will be paying off your mortgage for you.
Buy and sell
Flipping houses seem like a serious endeavour and it is definitely not one to take on without serious consideration.
However, the upside of flipping property is that the potential earnings are substantial.
Before you take on a flipping project, it’s always good to get some advice from people who have been there, done that. There are a number of things to think about that could potentially impact your cash flow like if you should do renovations before selling or if you will recoup all of your expenses, including stamp duty and solicitors fees when it comes time to sell the property.
Airbnb is one of many very popular holiday accommodation listing sites. Using your property as a holiday rental is similar to renting out your property to a normal tenant, but without the serious commitments or having to manage it long term.
If you happen to have a unique property (tiny house, cabin or converted caravan) even better! You may be able to charge higher rates for that unique experience. Earnings can fluctuate from month to month but the potential means it’s definitely worth considering.
Build a portfolio
If you are financially stable and have a good repayment history, you may consider scaling up your property portfolio. Building a solid property portfolio is made easier if you use the equity you’ve built in other investments to purchase more properties.
Whether you are just starting out in the property market or if you are an experienced real estate investor, there are always things to consider and think about before making the leap. Always think about what will work for you, your financial situation and also your future endeavours. Also make sure you do plenty of market research and consult a professional so you don’t make any mistakes and can have peace of mind throughout the whole experience.