There is nothing as fulfilling as making money while you sleep. One of the best ways to make passive income is by investing in real estate and statistics show that there is a high demand for rentals in the Canadian housing market. According to rentcafe.com, the average rent of an apartment in Ontario has increased by 8% compared to 2020.
But how much work needs to go into real estate investing? How 'passive' is real estate investing, really? Well, it all depends on the kind of investment strategy you choose.
Let us look at a few different strategies:
Long-term rentals
Investing in a traditional rental property is one of the most popular ways of making money in real estate. If you choose the right location, you can make a good return on investment. However, being a landlord comes with a lot of work. You will need to find and screen tenants, prepare a lease agreement, collect rent, handle repairs and even enforce evictions. To make your income more ‘passive’, you might need to hire a professional property manager.
Short-term rentals
Short-term rentals like Airbnb can also be very lucrative. Since rent is charged on a nightly basis, you can make a higher ROI than you would with traditional rentals. If you don’t have a property manager, running a vacation rental property can be very hectic. You will have to attend tasks like checking guests in and out, calendar management and cancellations, restocking and cleaning the property. There's nothing passive about it.
Real estate investment trusts (REITs)
REITs are companies or organizations that invest in income-producing real estate projects like hotels, apartments or office buildings. Investing in REITs is almost similar to purchasing stocks or shares. This kind of investment saves you the work, cost and risk of owning real estate yourself. However, the returns are low and you don’t have any control over the property.
Becoming a Silent Partner
There are ways to get involved with a group of investors in order to truly take a backseat role in real estate investing. You can go the crowdfunding way where you hand over your money and have no input or personal involvement at all. This method works fine, but there are no learning opportunities. While it’s truly passive, there’s no involvement at all. It feels the same as investing in stocks.
Partnering with a firm that offers passive real estate investment opportunities in your area, while also providing investment coaching and the ability to be involved, is usually the best way to start real estate investing. You get to choose how much involvement you want, you know the experts you’re working with, and you know the locations and types of properties that become your investment. This is the opportunity that Regalway Homes offers. If you’re ready to learn more, you should sign up for a free consultation now: Book Time Now!