back

5 Best Ways to Invest in Real Estate for Passive Income

Published on October 03, 2024

Not into managing tenants or fixing up properties? No problem. You can still invest in real estate passively and build your portfolio without the daily grind of property management.

Not into managing tenants or fixing up properties? No problem. You can still invest in real estate passively and build your portfolio without the daily grind of property management.

In this guide, we'll break down five ways to find passive real estate investment opportunities. These strategies will help you grow your investments with minimal effort.

1. REITs (Real Estate Investment Trusts)

Real Estate Investment Trusts (REITs) are companies that own and manage income-generating properties. Investing in a REIT is like buying shares in a company - you get a share of a real estate portfolio and earn dividends based on how well those properties perform.

REITs are required to pay out at least 90% of their profits to shareholders, which can lead to solid returns. For example, in July 2024, U.S. REITs had an average return of 8.33%:

You can buy and sell REITs on major stock exchanges like regular stocks. This makes it easy to get in or out of your investment.

2. Hire a Property Manager

Hiring a property manager is a good option if you prefer to own 100% of a property but keep your involvement to a minimum. A property manager can handle everything from screening tenants and collecting rent to handling maintenance and repairs.

While you’ll need to give up a portion of your rental income to cover their fees, it’s worth it to avoid the hassle of managing the property yourself. You can enjoy the benefits of ownership without the day-to-day responsibilities.

3. Real Estate Crowdfunding Platforms

Real estate crowdfunding platforms are quickly gaining popularity as a way to invest. With the global market expected to grow at an impressive 45.6% annually through 2030, it’s a trend worth paying attention to.

These platforms allow you to pool your money with other investors to fund real estate projects. You can invest in residential and commercial properties without needing a large amount of upfront capital. The platform takes care of property management, so you can enjoy the returns without any hands-on involvement.

4. Sale-Leaseback Investments

Sale-leaseback investments offer a unique opportunity for passive real estate investors. In this arrangement, a property owner sells their property but then leases it back from the buyer.

This allows the seller to free up cash while continuing to use the property. The investor receives a steady income stream from the lease, often backed by the seller’s business.

These investments typically require minimal management, making them an excellent option for generating passive income from real estate.

5. Real Estate Syndications

Real estate syndications allow investors to pool their money together to buy larger properties. This type of passive real estate investment is often used to fund office buildings, retail centres, and other commercial real estate.

A lead syndicator typically manages the entire process. They find the property, secure financing, and take care of day-to-day operations. As an investor, you provide the capital and share in the profits without having to worry about the management of the property.

Conclusion

There are plenty of ways you can find passive real estate investment opportunities. It all depends on how flexible you want your investment to be and how much involvement you prefer.

If you're searching for your next big investment, don't miss Cityscape Global 2024. In 2023, over $29.3 billion in deals were announced at the world's largest real estate event.

It's the perfect place to uncover top investment opportunities, connect with key industry players, and stay updated on the latest trends in fast-growing markets.