Many people are used to going out and hustling to boost their income. But what if there were an easier way?
I’m here to tell you that there is. And I promise, it’s not a scam.
In fact, I know a lot of people — myself included — who enjoy their fair share of passive income thanks to the way they’ve set up their investment portfolios. And if you’re willing to invest in real estate, you too can enjoy a steady stream of ongoing income you don’t have to work for.
Now you may be thinking, “Wait a minute — how on Earth is buying real estate a means of generating passive income?” And I hear you.
A lot of real estate investors earn money by flipping houses or maintaining rental properties. But those approaches involve a lot of ongoing work.
My approach to passive income through real estate only requires you to do some legwork up front. And from there, you can sit back and enjoy the fruits of your (minimal) labor without having to lift a finger.
Invest in real estate companies that pay you to own them
You may be familiar with the concept of dividend stocks. Within the realm of real estate, there’s a similar asset known as REITs, or real estate investment trusts.
REITs are companies that own and operate different types of properties. There are industrial REITs, which manage warehouses and fulfillment centers; healthcare REITs, which operate hospitals and nursing facilities; and retail REITs, which own malls and shopping centers.
REITs offer you two ways to make money, and both don’t require ongoing effort. First, REIT shares can gain value in time. So the simple act of keeping them in your portfolio could make you richer through the years.
Also, REITs tend to pay higher-than-average dividends based on their structure. That’s steady income you can sit back and collect or reinvest if you so choose.
If all of this sounds too good to be true, I’m telling you, it’s not. But this isn’t to say you won’t do any work in the course of investing in REITs. That’s because you will need to do your research to figure out which REITs belong in your portfolio.
And to that end, I’d caution you to look beyond dividends. Sure, those are a big draw for REIT holders. But in addition to generous dividend yields, you’ll want to look at different companies’ prospects and financials.
Industrial REITs, for example, may be a solid bet right now because the pandemic has spurred a major uptick in digital sales. Retailers need more warehousing space, which means industrial REITs are aimed to benefit from that uptick in demand.
That’s just one example, and it pays to dig into different REIT sectors when building your portfolio. It then pays to research individual companies within each REIT sector you’re looking at.
But all told, REITs are a great way to earn lots of passive income without having to break a sweat. And so if you’re willing to do that initial work, you can set yourself up to enjoy the rewards for many years to come.