Most real estate investors would usually think of rental properties when it comes to passive income investments.
But, to your surprise, there are many more ways to make passive income investments.
For instance, you can earn passive income by investing in real estate funds or stock bonds. Likewise, you can co-invest in commercial real estate properties to earn dividends.
That being said, it is also noteworthy that passive income investments are not limited to real estate. But, still, the industry is sought to be the perfect investment opportunity.
Wish to know why?
Keep reading to know more.
Tax-Deferred Cash Returns
Did you know that equity-based investments allow tax-deferred cash returns?
Consider this; the dividend that you earn from stock investments is taxed at your highest income bracket. This is true because there are no depreciation expenses.
In contrast, real estate ownership allows you to save taxes on the share of your depreciation expense. As a result, you get to keep more of your earnings.
No Direct Dealing With Tenants
It is noteworthy that passive real estate investments allow you to focus on the returns instead of the management of the property.
Let us put this into perspective for you.
As a passive investor, you're only responsible for making the initial investment capital. More so, co investing in real estate means that you own equity in the property and not the property itself. As a result, you do not need to deal with the day-to-day management.
Everything else is usually to be handled by the property management company.
You Don't Owe Any Debts
Unlike conventional real estate investments, you don't need to take out any mortgage for passive investments.
For example, when you're into house flipping or wish to invest in a rental property, you'll need to own the property. However, that is not the case with passive investments.
You are not bound to arrange for thousands of dollars to invest in equity. In short, you can start with as little as a few hundred dollars. And yet, enjoy the returns on your investment.
Leverage Expertise And Experience Of Others
You might wish to make your own decisions, be it assessing and investing in stocks or properties on your own, or through a broker.
However, it would also bring along the risks of losses to be borne by you.
On the other hand, when you invest passively, you can leverage the expertise and experience of others. Meaning, you'd be involved with an investments expert who can guide you about which equity investments would be more profitable.
Quick Growth Opportunities
To your surprise, passive investments are pretty straightforward and can be completed quickly. All you need to do is decide the venture you wish to invest in, sign the legal paperwork and transfer the funds.
As soon as the payment is realized, you become an equity stakeholder of the venture.
Besides, you can also start earning dividends in the profits that the venture earns. As a result, you can start making money while you sleep, and the experts do their work.
Summing It Up
It won't be wrong to say that passive real estate investments are easy for beginners. There are lower risks involved and a promise of better returns for your investment.
College student? Learn about passive income for college students.