All of us have heard about side hustles. It seems like everyone has something going on in addition to their regular, full-time career that allows them to earn some extra income while pursuing a unique passion.
Real estate investing can be a great side hustle, especially if you don’t want to invest a lot of hours or labor into the money you make. Real estate has become a popular way to earn passive income on a tangible asset. Most people who buy property in order to produce income find this to be a rewarding path, and whether you’re a new investor or you’re hoping to increase the value of a growing portfolio, we have some strategies that can help you succeed with your property.
At Maryland Property Management, we work with investors who are doing a lot of different things. We love helping new investors search for an ideal rental property. We love helping experienced investors navigate a 1031 exchange. Whether you’re thinking about turning your existing home into a rental or you want to buy a portfolio of condos to rent out, we can help you enjoy passive earnings while renting out homes.
It’s important that you understand what passive actually means when we’re talking about how you earn income on your property.
It’s passive in the sense that you’re not actively working to bring in the income you need; tenants are paying rent to live in your property. That doesn’t mean that you aren’t doing anything. In order to succeed, the act of investing cannot be passive. You must keep up with the market, you must pay attention to how your assets are performing, and, perhaps most importantly, you must partner with experts such as local Maryland property managers.
Rental Properties Provide Passive Income
There are several easy to invest in real estate, and we’re going to talk about some of the particulars a bit later in this blog. You can buy and flip homes, which was a popular strategy decades ago but is a little more nuanced now, in the current market. You can invest in Real Estate Investment Trusts (REITs). You can look for commercial investment opportunities.
When we’re talking about passive income, our preferred strategy is long-term residential rentals. These make a lot of sense when you want to maximize what you earn and minimize the amount of work that’s required from you. You have more control over your investment property, and you settle into a long-term buy and hold strategy, which really allows you to build wealth and increase the value of what you own over time. In a market like ours, you can rent out long term residences to well-qualified tenants and allow them to pay down your mortgage and contribute to your expenses while your investment grows in value.
Purchasing and renting out residential properties can generate a consistent and recurring stream of passive income over time, as long as you have tenants who are willing to pay rent on time each month. You’ll also need to keep your property well-maintained and up to date. There will be investments that you have to make in order to keep it in good condition. But, every dollar you spend will ultimately see a return, especially when you’re making cost-effective renovations that are in high demand among tenants.
Know Your Market When Investing in Real Estate
Taking the time to research the rental market and select quality tenants can go a long way towards ensuring your success with this strategy. If you want to depend on passive income, you need to know how the market is going to impact what you earn, who you attract, and where the competition lands.
It’s a passive investment, but you need some basic knowledge so you choose the right property. You’ll need to understand what your rental value is likely to be, how long it may take you to find a tenant, and what kind of maintenance and upkeep you’ll need to budget for once you own the property.
Get to know the competing properties, the tenant demographics, and the economic factors that impact rental housing. This will make your investment more successful and profitable.
Partner with Maryland Property Managers
A passive investment means you don’t have to spend a lot of your own time and resources leasing, managing, and maintaining your properties. If you have the space to rent out, you should go ahead and do that; but you don’t want to rent it out on your own. Instead, rely on the expertise of local property managers. You’re looking for a passive investment, so you won’t want to spend all of your own time marketing your rental property, showing the home, screening tenants, and collecting rent.
Count on a management company like ours. We can enforce the lease, respond to maintenance, and take care of all the day-to-day logistics so you can focus on other priorities.
When you’re looking for a passive and steady rental income stream, there are several great strategies available for building wealth with real estate investments. But, you have to know where to look and how best to take advantage of them.
Converting Space into Rental Income: Strategies for Earning Money on Property
If you are looking for an additional source of income without having to invest a lot of labor and time, real estate investing is probably for you. Perhaps you’re preparing to sell your home. Why not rent it out instead? This can be a great introduction to what it might be like to invest.
Real estate investment is an ideal way to make money passively, and investing in it can offer a stable cash flow with minimal effort. Here are some of the different strategies for success in real estate investment. The right one for you will depend on your current financial situation, your interest and knowledge in real estate, and your own investment goals.
- Residential Rental Properties
We have already discussed the power of investing in residential rental properties. Investing in rental properties is the most common and traditional way of generating passive income in real estate and it allows you to set up a long term lease with a good tenant. When you invest in a rental property, you allow tenants to rent a space that you own. One of the greatest benefits of investing in rental properties is the steady stream of passive income that they offer. Plus, there are some tax benefits that you can enjoy from this kind of investment.
- Real Estate Investment Trusts (REITs)
Another way to invest in real estate is through Real Estate Investment Trusts (REITs). REITs allow investors to pool their money to buy and manage commercial properties, such as offices, apartments, and malls. Investors receive a portion of the income generated by the properties, similar to owning stocks and receiving dividends. REITs are a low-risk option for investors since they buy shares of a diversified portfolio of properties.
- Flipping Homes
Flipping properties, as we said earlier, was a popular strategy a few years ago and has become more difficult in recent years. Earning extreme profits is more challenging in our expensive market, especially with interest rates and renovation costs as high as they are. But, it works in some cases. When flipping homes, it’s possible for owners to make a quick profit by buying properties at a lower price, completing a quick renovation, and selling that property at a higher price. It is an excellent investment for anyone who has a lot of capital to invest upfront and who has valuable experience in renovating properties. To succeed in flipping properties, you need to have a good sense of market trends, and you also need to identify the right contractors to keep your expenses low.
- Peer-to-Peer Lending
Peer-to-Peer lending (P2P) has risen as a way to invest in real estate from the financial side. It involves lending money to a real estate investor to buy or renovate a property. As the investor pays back the loan with interest, you make a passive income. P2P investing is a great option for those who want to invest in real estate but lack the capital or the interest to become a landlord or flip properties.
- Short Term and Vacation Rentals
There’s money to be made with vacation rentals and short term properties. This is a part of the market that has exploded in popularity lately. Vacation rentals are perfect investments for anyone wanting to make passive income from real estate with low maintenance. Vacation rentals include making your home available for rent. You can rent out an entire space or just a room, and it can be an excellent way to make money on a seasonal basis. This option is ideal if you own a home in a popular vacation spot that you only use for a few weeks every year.
Investing in real estate can help you generate passive income and build wealth over time. However, it’s essential to understand the different investment strategies to find the one that works best for you. Consider your financial goals, experience, and amount of capital you can invest to find the right investment strategy and begin earning passive income.
Don’t forget the professional help that’s available. Contact us at Maryland Property Management.
