With so much up in the air right now, you may be turning to real estate investing as an option for passive income. If so, here are 7 rules to follow for using real estate investing to create passive income for you.
Pick your game plan.
Start out by first deciding what type of investing strategy is best for you. There are so many different types of investments that you want to hone in on one or two strategies before diving in. Investing in a commercial building is very different from investing in an apartment building or a multifamily home.
Passive doesn’t mean hands off.
Passive income doesn’t mean that there is no work involved. There is plenty of due diligence that you will need to do up front before you make your investment.
Diversification matters as much as location.
Having a good mix of property types, locations, and tenants will increase your chances of creating a stable income stream well into the future.
Pay attention to real estate market trends.
Different parts of the real estate market perform differently during different stages of market and economic shifts. Do your research beforehand to figure out which is the best option for you and your market.
Choose the right capital sources.
When buying real estate remember that there are additional resources for your purchase other than a traditional lender, such as a self-directed IRA.
Know your time horizon.
Make sure that you know before you take on a new property how easy or difficult it will be to unload it if you need to liquidate to get cash out of it. For example, in some areas a single or multi-family home might be much easier to sell than an apartment building.
Professional help can make passive real estate investing easier.
You don’t have to know everything or be good at everything when it comes to real estate investing. There’s a lot that you can leave to the professionals and, while you may be paying them out of your profits for their services, it will be worth it in the long run.
Thank you for these pearls of wisdom.