Most people decide to pursue investing in real estate as a way to earn passive income. But if you decide to purchase rental properties, you may end up putting in more work than you initially realized, making it less of a “passive” money maker due to the headaches of the day to day management of rental properties.
Luckily, there are ways you can invest in real estate as a passive investment. One way is through crowdfunded real estate. Here’s why crowdfunded real estate is a great passive investment.
1. Your Investment Doesn’t Have to Be Huge
Crowdfunded real estate allows you to pool the money you have available to invest with a large number of other qualified investors. Because you are investing money along with other people, your investment doesn’t have to be huge like it would if you were trying to buy a property on your own.
For instance, you can invest in some crowd funded platforms with an initial investment of only $1,000. The profits gained by crowdfunding are shared among all of the investors in the pool. You can make a withdrawal without penalty up to four times per year, and unlike some other types of investments, no fees are charged if your investments aren’t performing well.
There are risks of course, but crowd funded real estate shows good returns on your investment without you having to do the work yourself. It’s a great way to start investing in real estate without having a large amount of money.
2. Uses the Wisdom of Experts
A Real Estate Investment Trust, or REIT, is a way of investing in real estate without a lot of money. REIT’s use a management team made up of experts whose job is to devise strategies in real estate and invest the crowdfunds into real estate you wouldn’t normally be able to invest in on your own.
These types of investments are usually properties such as warehouses, apartment buildings, shopping centers and many other commercial real estate types. These experts deal with large amounts of money, and their goal is to make you a profit through wise investment choices in several properties they have assessed as good risks on your initial investment.
Because multiple properties are invested in, it reduces the risk and increases the possible growth of your investment dollars. So, you get the advantage of having not just one expert, but a whole team of experts working for you.
3. Income Without Much Management
Crowd funded real estate can help you increase your real estate income without the hassles of day to day management of owning rental properties. As a landlord, you would have to handle all kinds of tenant complaints, sometimes on a daily basis.
By crowdfunding with an REIT, you get to skip being a landlord altogether and still make a profit on your investment. You get to sit back and watch your money increase while someone else deals with management of the property.
Of course, there are other options if you are looking for passive investments. However, crowdfunded real estate is a great passive investment to consider adding to your portfolio.
Have you ever thought about investing in real estate? What is holding you back?