The Internet Monetized

Real Estate Investment Produces Passive Income

You are looking at this website because you want to discover a way to make passive income, whether online or off – in other words, income that will continue to roll in month after month without you having to do anything to make that happen.

How can you do that? Well, the solution the banks will try to sell you is that you put your money in the bank and collect the interest. Yes, that IS passive income, but it does not really give you the return you would like to have, otherwise you wouldn’t be here!

Another way is to invest in someone’s brick-and-mortar business as a silent partner or as a share-holder. This may give you a better return, particularly if the company is already functioning (not a start-up) and is showing good results. This can also be done as stock holdings from a listed company on one of the various stock exchanges, or via a mutual fund that does the portfolio selections for you (but also generally charges you a substantial fee, one way or another).

Yet another way is to invest your hard-earned money in real estate, and specifically in real estate that produces income. Funny enough, that’s the subject of this article! You don’t need to have millions of dollars to make a reasonable income from real estate. What you do need is some common sense, and a little help from your friendly local real estate agent (for optimum results) or someone else who has some experience in the business. Don’t expect to make a killing overnight – that will only lead you to one disaster after another. What you can expect is a reasonable return on your investment, and if you do it properly, one that is relatively secure. In this regard, you need to think about the term “relatively secure.” Think about all the “secure” investors who bought and held General Motors stock for many years. Not all so many years ago, the saying was “What is good for General Motors is good for the Country!” Needless to say, things changed! The same is true for people who invested in real estate in New Orleans pre-Katrina. The chances are good that they lost most or even all of their investment. I’m not trying to scare you away, just to point out that no system is fool-proof.

Getting back to real estate, if you want to have passive (it must be said, “relatively passive”) income from real estate investments, you need to look for properties that are income-producing. Generally, this comes from rentals. But don’t get yourself locked into renting rooms or apartments in terms of rentals, there are also other ways, such as receiving rent from outdoor advertising (think “billboard”) on otherwise vacant land, or from rights-of-way (a private street), as well as others. Keep your mind open!

Above, we talked about “relatively passive” income – why? Well, think about it this way: if you are renting a house to someone, you may have to collect the rent every month, maybe even make or arrange for someone to make repairs, do termite inspections and prevention, make modifications for electrical or heating systems, renew old equipment, find replacement renters, etc. The best way to avoid most of these problems on a personal basis is to use an agency to take care of the rental for you. But – as you probably already guessed – they will want a fee for their services. On the other hand, they also probably have access to better/faster/more reliable repair people, etc. than you do, so it certainly will make sense to use an agency if the property is not close to where you live.

There will also be other expenses, like taxes, property-owner association fees, insurance (and make sure you are covered for liability), assessments from the city or county, etc. These are things that may not involve much time, but since they will impact your passive income, you need to be aware of them.

The next part is how much passive income you can expect from a real estate investment. The answer is probably “not much” to start with. Personal experience tells me that the real “profit” comes from the tax advantages in the early years of an investment. However, you won’t be able to cash in on this until the following year. If you have a substantial income, you will have some nice tax write-offs for depreciation of the rental building and contents (land does not depreciate), and business use of your home office and equipment. These tax advantages most likely will be more important financially in the short-to-medium term than the returns from the property itself. Later on, as real estate values rise (again, a question mark here! “?”), rental rates will also rise, and the actual rental income will become more important.

How can you accelerate the returns from your investment(s)? The most effective way is to obtain property at “below market” prices. There are a few ways to do this, and many, many books have been written about the subject. Today, the most popular way probably is buying property that has been foreclosed or is in imminent danger of foreclosure. Other ways are personal knowledge of individual situations, information from realtors, and even private advertising for real estate in local newspapers, on pinboards in supermarkets, etc. Another way to improve your returns is to make a medium-term or even long-term agreement with a company or other organisation for their employees or customers. This works especially well for apartments.

Now, we have discussed some ways to build passive income. Don’t take the risk of putting all your eggs in one basket. This can mean that you should expand into different geographical areas in real estate, but also use different sources of passive income, in addition to real estate. If you want to build a long-term passive income system from any system, probably the best way is to re-invest your returns. That way your investment will grow and ultimately give you the returns you would like to have.

There is a particular online source of passive income available to you today. It is not expensive (it is limited to $100 minimum and $500 maximum per person) and once you have made the investment, NO additional attention is required! Click on this passive income online link to see for yourself.

Want to learn more about investing in real estate? Take a look at Bulgaria Realtor and in particular, join the Free Real Estate Investing Course at http://good2004.biz

Thank you for reading this far down!

Darlene   
for
The Internet Monetized

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Real Estate Investment Produces Passive Income

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