It’s a known fact that real estate investing can yield significant returns if done the right way. Before making any investment, do your due diligence and clearly understand the industry, so you will know what direction you want to go. For example, consider whether you’re more interested in owning an apartment building or multifamily home to generate real estate passive income versus a commercial building in which you’re dealing with business tenants. Furthermore, think about how involved you want to be when collecting rent, handling repairs, or having those tasks taken care of by a property management company.
There’s no right or wrong answer; assess your budget and determine what is the most cost-effective for you. Depending on how much you want to scale and grow, some individuals start their own in-house property management company (check your state law on the requirement, you may need a real estate broker or a realtor on your team), cleaning service, and so forth.
To start generating that passive income, (aka) sleep money, requires putting in the upfront work; for some people, this may include blood, sweat, and lots of tears. You may be fortunate to land a turnkey property with little to no work required, or buy a tear-down with lots of equity (see my article on using equity to build wealth).
Always make sure to do your due diligence.
Your experience level, risk tolerance, and capital can help determine if single-family vs. multiple-family is a suitable investment for you. Some experts argue that multi-family is better than commercial in a recession because people are always renting. Others may say you should diversify your portfolio by spreading investment dollars across various real estate such as mutual funds, investment trusts, syndication deals, and becoming a lender.
Choosing a suitable investment will determine how much you have available to invest in passive real estate, allowing you to retire early and do what you like best. Feel free to reach out to learn how we can help find and get your first or next investment started.