6 Easiest Ways To Earn Passive Income Through Real Estate, According to Experts

Buying a condo or house, fixing it up to make it tenant-ready and renting it to a family or roommates is traditionally how we think of earning income through real estate. If you have a solid property and good, rent-paying tenants, all you have to do is sit back and collect the monthly checks.

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But owning an investment property isn’t all that easy. Repairs happen. Sometimes tenants might not prove as responsible as you’d like. And what if it sits vacant for a few months or longer?

Not everyone has the time — or stomach — to be a landlord, but that doesn’t mean you can’t gain a passive income stream through real estate. Plenty of other ways exist to bring in money through properties that don’t include responding to calls of an overflowing toilet or a broken furnace in the middle of the night.

GOBankingRates asked the experts for their ideas on how to make money in real estate in a more passive way — and they had plenty of thoughts.

Syndication

“One common way to passively invest in real estate investment is a syndication, said Michael Margarella of Next Play Investments. “In a syndication, a passive investor contributes capital toward the purchase, renovation and/or development of a large property – such as an apartment complex or self-storage facility – that is managed by a real estate professional. The passive investor is not involved in the day-to-day operations of the property and does not share any of the responsibilities of real estate management, but still receives equity in the property and a share of the profits generated by the property. This results in passive income and tax benefits.”

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Private Lending

“This strategy can be used to lend money to a real estate investor in order for them to be able to fund some of their property purchases or renovations in exchange for a passive return,” said Sebastian Jania, the owner of Ontario Property Buyers. “This return can be given on a monthly basis, through an equity split in the project, or in the form of a balloon payment at the end of a term. The benefit here is that the lender takes the role of a passive partner instead of a working partner so they are hands off and can verify the working partner’s abilities through their track record of deals.”

Buying a Mortgage Note

When you buy a mortgage note that is outstanding, you become the mortgage holder and recipient of the monthly principal and interest payments.

“You are essentially acting as the bank,” said Nick Disney, who runs Sell My San Antonio House. “This gives you true passive income without having to deal with managing properties, late-night phone calls and repairs. You also get to retain the property as collateral for the length of the loan.”

Lease Multiplier

If you buy a four-bedroom house as an investment, for example, you could make more passive income by dividing it into four separate rental rooms instead of marketing it as one property, said Ryan Barone, co-founder and CEO of RentRedi.

“This can potentially increase the total rent collected from the property and make it more resistant to vacancy,” Barone said. “Losing one tenant doesn’t mean the whole property is unoccupied.”

Co-Living Spaces for Digital Nomads

Take the lease multiplier strategy a step further and fully furnish your space. Your tenants won’t need to haul their beds and dressers in and out. Instead, they can just move in and have everything they need. This is especially appealing to people who can work anywhere and enjoy traveling from area to area to experience new places.

“In recent years, the rise of digital nomads has created a demand for flexible, communal living arrangements,” said Devraj Marigangappa, the head of marketing at real-estate developer Agrocorp. “Investing in co-living spaces specifically designed for remote workers and freelancers can be lucrative. These spaces typically offer fully furnished rooms, shared amenities and high-speed internet, catering to the needs of the modern workforce. The trend of remote work will likely continue growing, ensuring a steady stream of potential tenants seeking comfortable and well-equipped living spaces.”

Rent Out Your Extra Space

Many people rent spare bedrooms in their homes, but what if your extra space isn’t a bedroom. Barone said it still can provide passive income.

“Rent spaces like a garage as a storage area, workshop, or office space,” he said. “This taps into a market of people needing space without the need for living accommodations.”

If you have a large lot with space for parking, many RV or boat owners would happily rent some of it.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: 6 Easiest Ways To Earn Passive Income Through Real Estate, According to Experts

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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