Don’t believe the hype. Real estate investment can be a full-time job. Ask any house-flipper who has spent hours prowling neighborhoods, bidding at foreclosure auctions, and arguing with contractors or hammering nails into floorboards.
Yes, you can create wealth quickly this way … but you will trade a lot of time and sweat equity building it. Many more people come to real estate hoping for passive income.
Some of them refer to it as “mailbox money” — money that shows up as checks in the mailbox, which they don’t have to work for (other than the effort it takes to walk to the mailbox). Of course, in the age of PayPal and eChecks, even the mailbox is an unnecessary step.
In other words, they want a stream of cash flow that they don’t have to work for — so they can quit their jobs, retire early, and devote their time to their passions. Traveling, creating art, getting in shape, spending time with their families … to spend their time on the things they want to do, rather than things they have to do.
Is this possible with real estate? Yes! If you buy right, the rental revenue from buy-and-hold properties can become the passive income stream that retires your job. But you have to be strategic about it. Here are three ways to generate passive income with real estate …
1. Automate
Many software solutions exist to help you automate the nuts and bolts of running rental property. Apps like PayRent or AppFolio automate rent billing and collection and may also automate the process of application and tenant screening, signing lease contracts, keeping the books, and generating maintenance request tickets.
These apps are often reasonably-priced for the time and headaches they save you — no more banging on doors or chasing down rent checks.
2. Outsource
Of course, not every function of a rental property can be automated. To make your rent revenue truly passive, you will eventually need to outsource tasks so you can be confident they will get done and done correctly — even while you are sunning yourself on the beach in Cancun.
Tasks you would need to outsource include:
- Repairs and maintenance. Establish a relationship with a maintenance contractor or handyman, whom the tenant can call instead of you if the toilet breaks at 2am. Some tasks, like lawn care and pest control, can be set up on a recurring contract.
- Showing the property. You might need to form a relationship with a real estate agent, who can show your property to prospective tenants in exchange for a commission on the lease.
- Property management. Eventually, it might be worth it to outsource all operational responsibility to a professional property manager. This not only saves you time, but it will protect you from rookie mistakes (assuming the manager is good).
Of course, each of these outsourced activities comes with a price tag, which chips away at that cash flow you were supposed to retire on.
3. Invest Passively
Neither automation nor outsourcing saves you from the most time-consuming aspect of real estate investment — finding the right property and performing due diligence. If you really want to just invest cash and get “mailbox money” back, consider passive investing with a real estate syndication.
Syndication companies source properties, underwrite them, do the due diligence, obtain financing, outsource management, and refinance or dispose of the property. In other words, they do all the hard parts. Your job is to simply collect the checks.
Of course, syndicators take fees for this service … but they also work with larger-scale commercial properties, allowing even small-cap investors to take advantage of the economies of scale available from large apartment complexes or commercial buildings.
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The only missing piece to invest passively in real estate syndications is to find a syndication company that you trust. Join the All Aboard Capital Investor Club or Schedule a Call today to get to know each other, hear about some of the deals we’re working on, and discover how our sponsored deals can put passive income in your mailbox. Cabo, here you come.
