Top 5 ways to earn passive income from Real Estate

Everyone’s calendar skips the year 2020, and the pandemic is to be blamed. Though it has brought unprecedented apprehensions, it has left some lessons worth noting, like health and hygiene, passive income, owning a house, and many more. The pandemic has had some gruelling effects due to the unofficial pay cuts and rising unemployment. This has stressed the need for passive income. It has brought a change in the way people considered passive income generation earlier. It has indeed specified that passive income is mandatory to shield yourself during low times like these. Along with the protection, here are a few other benefits that make passive income generation essential. 

Why Passive Income?

Passive income lends a helping hand to meet future demands and expenditures. Any unanticipated concerns that require heavy monetary resources can be addressed by liquidating your passive income assets.

It shields you during challenging times like Recession, Inflation during which the costs of living rises. Passive investments earn and support your income during these times.

Passive Income sources let you earn from anywhere as today’s technology works the best in favour of every investor through the various digital platforms. You can invest in a property, and the income flows into your account wherever you might be!

After knowing how passive income supports you, if you are pondering how to earn passive income, let me tell you Real Estate is the destination! Here are a few passive income investment options that you can try out!

Real Estate Investments for Passive Income Generation

Commercial Leasing

Commercial properties occupy a prominent place in the bucket list of investors owing to the high returns they generate and the multitude of investment options they offer. There are various commercial properties available for you to invest in, like warehouses, office spaces, data centres, and so on.

Commercial properties offer a high Return on Investment (ROI) of approximately 10-12%, ensuring good returns. Commercial Real Estate assets have long-term leasing agreements as compared to other assets of real estate. This reduces the vacancy risk and provides a stable income flow, which is the prime motive of passive income. 

Commercial Leasing demands attention and cares owing to the changing trends and demands of the markets. The property needs to be upgraded and renovated accordingly. The costs of maintenance and repairs are considerably high. These properties also require you to be in touch with the trends; else, you shall be left behind! So, if you are wary of these factors, there is another passive income source – residential property.

Residential Income

The very first investment option that strikes anyone when asked about passive income is residential properties. Residential properties are one of the best passive income generating ideas. You can buy a residential property and rent it out to earn steady regular returns. 

These properties offer you various advantages over commercial properties in terms of maintenance and repairs, up-grading the asset, and many more. The maintenance and repair costs are comparatively less for residential properties. Residential properties are the saviours amidst the challenges. In simple words, they help you cope with the rising expenditures during inflation. 

Being the utility sector, residential real estate is deemed evergreen, and any falling trends are intermittent. Hence, they offer security against your investment along with passive income generation.   

Though these stand at the pinnacle of passive income sources, these assets demand attention and care. The repair concerns have to be addressed at the earliest, and the tenants should be screened for a hassle-free earning. On account of vacancies, you have to hunt for new ones. In the busy world, you might want to avoid these minor hitches. If you want to avoid these, then proceed to the next smart passive income source. 

Fractional Assets

Fractional assets are the properties that are owned by multiple investors who have contributed to the investment. In fractional ownership, the investors with small ticket sizes gather the money and invest in the real estate properties to earn returns. 

Fractional assets are the best passive income investments as they offer the investors every privilege possible. You can invest in institutional-grade assets with as low an investment as Rs. 5 Lakhs and earn lucrative returns. Often, the properties are high-performing assets like warehouses, high-end residential assets that offer fractional investments. Hence, they bring in high returns. 

If you purchase a property, your property would be managed by the property manager, who the company will hire to vest your resources. Fractional assets offer investors multiple investment options ranging from residential to commercial support. Therefore, you can bag a share of your dream property and earn hassle-free income, which is the crucial feature of passive income.  

Debentures

Debentures are debt instruments that help the developers pool the investments from various investors. The investors buy the company’s debentures and earn returns through the interests paid out by the company in the frequency of monthly, quarterly, or annually. 

The earnings from debentures best define passive income as they let you earn without holding property and managing its concerns. Among the types of debentures, secured debentures offer the security of investment as the company assets back your investments. Under any circumstances like defaulting, you can liquidate the asset and earn back your investment. This seems to be the golden egg as the investment’s chief objective is to be safeguarded while making profits.

Peer-to-Peer Lending

Peer-to-Peer lending, commonly referred to as P2P lending, is a passive income-generating source where the developer seeks a loan from the individual. You, as an investor, give the funds to the developer. You get to earn through the interests paid by the developer. The developer does not have to go through the tedious processes of the financial institutions. You can make profitable returns through the stakes as the interest rates are comparatively higher owing to the risk.

Though it seems lucrative and straightforward, the risk factor involved in this income generation is high. If you are a beginner, you may try out other options mentioned above.

Bottom Line  

Passive income generation is always desirable, owing to the growing expenditure and cost of living. Passive income supports you under any unforeseen circumstances and helps you meet the expenses. It wants to earn passively, and real estate has the most to offer you through various passive income investments like residential, commercial properties, fractional assets, and many more discussed in this article. 

Real estate provides ample opportunities that are less risky as compared to socks and private bonds. The return offered by these investments is substantially high when compared to other market instruments. Every asset has its suitability range, and you can evaluate your obligations and aspirations before you invest in any property to avoid any setbacks.

Want to invest in real estate right away to earn passive income? Assetmonk is here to get your desires fulfilled at the earliest! Assetmonk is a real estate investing platform that helps investors find the assets of their choice. Highly curated assets are listed on our platform that has high expected yields of IRR of up to 21%.