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3 Steps to Building a Passive Income Empire Through Real Estate

Earning passive income through real estate investing sounds pretty appealing. You can earn money from your investments while working a full-time job, traveling, caring for kids or others, or just doing the things you enjoy and spending time with family and friends. Fortunately, there are several ways to earn passive income with real estate, and you can mix and match as many as you like.
Of course, while the income you’ll earn can be mostly passive, you’ll still need to put in some work up front to set everything up to run smoothly. Let’s take a look at a few of the most popular ways to invest in real estate and break down the three steps to building a passive income real estate empire.
Image source: Getty Images.

1. Identify your investment vehicles
You can begin by looking at your options and determining what types of real estate investments will work best for you. Popular options include buying and renting out residential or commercial property, buying and holding or leasing out vacant land, or investing in real estate investment trusts (REITs).
First, take a look at what types of real estate investments will fit your budget. If you’re looking to start small, REITs will allow you to invest in a wide variety of real estate for little money and can be a fantastic option. The diversity you can attain here is a big reason why you may choose to go this way, even if you do have a lot of money to invest.
If you can afford to invest in a residential property and are interested in going that route, you’ll want to explore both long-term and short-term rental investing and decide which makes the most sense for you. And to make it a passive investment, you’ll need to hire a property manager.
Meanwhile, after going through a considerable rough patch during the pandemic, commercial real estate now appears poised for a bright future. Vacant land also offers a variety of intriguing possibilities, discussed further here.
2. Research and invest
Once you’ve explored your options and decided on the ideal real estate investment vehicle or vehicles for you, it’s time for action. If you’ll be investing in REITs, decide whether you’ll be going through a broker or self-managing your portfolio. If you decide on the latter, we have plenty of resources to help you decide which REIT sectors you’re interested in and show you which specific REITs that our experts are recommending. Then, decide how much you’re looking to invest right now and go for it.
If you’re looking for land or property to invest in directly, it’s a good idea to find a real estate agent who works with investors to help in your search for the right fit and help you through the process. And in the current environment, it would probably also be a good idea to make a move quickly if you’re planning on financing the investment before interest rates increase any further.
3. Keep an eye on your investments
Of course, “passive income” doesn’t quite mean “set it and forget it.” If you own property, you’ll want to periodically check out what’s going on with comparable properties in the area so you can decide whether to make any changes to how you’re handling your investment. That might mean raising rent, developing land, or even selling if conditions are right.
You’ll also want to keep an eye on your REITs to ensure that you’re still happy with those investments despite market changes, management decisions, or other circumstances that could impact them.
Is real estate the right passive investment for you?
You have a life, and your investments should work around that fact. Real estate offers several ways to customize your portfolio to meet your time constraints, budget, and interests, making it an ideal investment for just about anyone.
Once you’ve decided which options make the most sense for you, done your homework, and made the investment, the hard part is usually behind you. Then you’ll know how to continue growing and expanding your investments if you so choose. Explore your options further to decide whether real estate might be the perfect passive investment option for you.
The Motley Fool has a disclosure policy. –

Earning passive income through real estate investing sounds pretty appealing. You can earn money from your investments while working a full-time job, traveling, caring for kids or others, or just doing the things you enjoy and spending time with family and friends. Fortunately, there are several ways to earn passive income with real estate, and you can mix and match as many as you like.

Of course, while the income you’ll earn can be mostly passive, you’ll still need to put in some work up front to set everything up to run smoothly. Let’s take a look at a few of the most popular ways to invest in real estate and break down the three steps to building a passive income real estate empire.

Image source: Getty Images.

1. Identify your investment vehicles

You can begin by looking at your options and determining what types of real estate investments will work best for you. Popular options include buying and renting out residential or commercial property, buying and holding or leasing out vacant land, or investing in real estate investment trusts (REITs).

First, take a look at what types of real estate investments will fit your budget. If you’re looking to start small, REITs will allow you to invest in a wide variety of real estate for little money and can be a fantastic option. The diversity you can attain here is a big reason why you may choose to go this way, even if you do have a lot of money to invest.

If you can afford to invest in a residential property and are interested in going that route, you’ll want to explore both long-term and short-term rental investing and decide which makes the most sense for you. And to make it a passive investment, you’ll need to hire a property manager.

Meanwhile, after going through a considerable rough patch during the pandemic, commercial real estate now appears poised for a bright future. Vacant land also offers a variety of intriguing possibilities, discussed further here.

2. Research and invest

Once you’ve explored your options and decided on the ideal real estate investment vehicle or vehicles for you, it’s time for action. If you’ll be investing in REITs, decide whether you’ll be going through a broker or self-managing your portfolio. If you decide on the latter, we have plenty of resources to help you decide which REIT sectors you’re interested in and show you which specific REITs that our experts are recommending. Then, decide how much you’re looking to invest right now and go for it.

If you’re looking for land or property to invest in directly, it’s a good idea to find a real estate agent who works with investors to help in your search for the right fit and help you through the process. And in the current environment, it would probably also be a good idea to make a move quickly if you’re planning on financing the investment before interest rates increase any further.

3. Keep an eye on your investments

Of course, “passive income” doesn’t quite mean “set it and forget it.” If you own property, you’ll want to periodically check out what’s going on with comparable properties in the area so you can decide whether to make any changes to how you’re handling your investment. That might mean raising rent, developing land, or even selling if conditions are right.

You’ll also want to keep an eye on your REITs to ensure that you’re still happy with those investments despite market changes, management decisions, or other circumstances that could impact them.

Is real estate the right passive investment for you?

You have a life, and your investments should work around that fact. Real estate offers several ways to customize your portfolio to meet your time constraints, budget, and interests, making it an ideal investment for just about anyone.

Once you’ve decided which options make the most sense for you, done your homework, and made the investment, the hard part is usually behind you. Then you’ll know how to continue growing and expanding your investments if you so choose. Explore your options further to decide whether real estate might be the perfect passive investment option for you.

The Motley Fool has a disclosure policy.

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