You’ll hear it tossed around here and on just about any other site: Build your passive income through real estate! I believe passionately that you can make a ton of money in just about any niche in real estate, but let’s be real—the way most people invest is hardly passive at all.
Let’s look at some ways to invest that are mostly or almost entirely passive.
Rental Property – Like I already mentioned, rental property is usually a semi-passive investment, but if you do it right, it can be mostly passive.
Pros: With a little bit of effort up front, you can receive the dividends for decades.
Cons: You’ll have to shop for and find deals, which can be time-consuming. You’ll also have to analyze all the deals, negotiate with the seller, and probably line up contractors for any major repairs. But, you can hand the property over to a management company and let it cash flow for years to come.
Private Lending or Partnering – Instead of being actively involved in house flipping or buying a rental property, you can be a private lender or equity partner.
Pros: Essentially, you are letting other people do all the work involved with finding deals, lining up projects, and filling apartments, but you get to earn some of the profits. All you have to do is vet the investor and underwrite the deals to make sure it makes sense.
Cons: You’ll experience lower returns and give up some control.
Partnering on a Syndication – One of the most passive forms of investing is to build some relationships with syndicators, get on their email lists, and wait until a deal pops up. You can then invest with them on the deal and start earning with doing hardly any work.
Pros: Non-accredited investors can partner. Deals are generally for larger properties, so there are economies of scale.
Cons: You generally need to have a personal relationship with a syndicator to invest. Also, the SEC limits the number of non-accredited partners to 35 or less.
Crowdfunding – This is the newest player on the block. Essentially, crowdfunding is exactly like syndicating, except investors are found online.
Pros: The crowdfunding platform does extra diligence, which means you can trust the deal a little bit more than normal.
Cons: There are lower returns than investing straight in a syndication due to the extra fees they place on the deal. Also, the SEC allows only accredited investors to invest in individual assets that are crowdfunded.
View the original article at Bigger Pockets