4 Types of Passive Real Estate Investing

Do you want to invest in real estate but hate the idea of being a landlord? If you choose to be active in your investments, you’ll have to either do the remodeling yourself or hire carpenters and plumbers to do the work for you. Or, if you choose to rent out the property, you’ll have to vet tenants and deal with those who refuse to pay.

Consider passive real estate investing instead. It’s a way of buying into real estate without actively managing the property yourself. Here are some types of passive real estate investing.

Real Estate Crowdfunding

With crowdfunding, you invest with several others in a management company that purchases farmland, office buildings, hotels and other commercial properties. Ask Stefan Soloviev, and he’ll tell you it’s a way of seeing a return on your investment without being actively involved. You typically won’t get your money back until the management company ends its investment, so be prepared for a long-term commitment if you choose to invest this way.

Turnkey Rentals

With a turnkey property, you purchase it and immediately rent it out again. If you’re not good at vetting renters and getting tough with those who don’t pay, hire a property management company. You’ll pay a fee that’s typically ten percent of the gross rents each month, but if you want a hands-off approach to real estate investing, you can’t beat a turnkey rental.

Real Estate Investment Trusts

By investing in a real estate investment trust, you become a shareholder entitled to annual dividends. The company you invest in takes your funds and the money of others and spends it on commercial properties, including office buildings, shopping malls, personal residences and other forms of real estate. These companies are then required by law to pay you and other shareholders 90 percent of their earnings annually.

Hard Money Lending

A hard lending company provides loans to people who have the skills to flip homes. These loans are typically short-term loans with higher rates than traditional mortgages. With these loans, the property is the collateral. These companies need money and are looking for financiers like you to provide them with money that they loan out and then pay you back in the form of shared profits. It’s a win-win for both of you.

Investing in real estate is a good, inflation-proof way to invest extra cash, but not everyone is cut out to be a landlord. Fortunately, you can still benefit from these passive types of real estate investments.