Once you’ve obtained your real estate license, probably the next thing you have in mind is earning and becoming established in the industry. It’s true that when you are a professional with a real estate license, it always feels gratifying and rewarding to have spare cash on your side.
As you know, most real estate brokers have flexible working time, and cash flow outside the salary could increase the net worth. It could even provide peace of mind knowing you’re close to financial stability if you have many closed deals a month.
If you are a professional with a real estate license, you must have encountered the words like “passive income” and that investing in real estate is a good source of income. The money you earn from the source does not require active participation. It’s the money earned without regular daily investment. In other words, there is little effort involved.
In this article, you will learn the common passive income for realtors and understand why it’s sustainable.
Ways to Create a Passive Income in Real Estate
Passive income has a lot of benefits. So, if you are wondering how to have passive income, read on for more details.
1. Single-family Units
If you wonder how to come up with a passive income once you have a real estate license, it could start with common examples. In fact, the easiest property type to understand is the single home or condominium units, which can be rented or purchased by only one tenant.
The single-family renters or tenants would prefer to take a lot of psychological ownership of the home, which would lead them to take good care of the said property. But then, when it’s already vacant, the single unit won’t bring income at all.
2. Duplexes and Triplexes
Some properties come with 2-4 units. They offer the same perks with single-family units but there is a lower requirement for intensive management when you compare it to an apartment complex.
Because of the increased number of tenants, the properties can be a little more complicated to manage than the single-family unit. However, it provides you with a better cash flow. Also, the risk of the potential vacancy could spread across many units instead of only one.
3. Residential Rentals for Long-term
Having a passive income in real estate usually comes from long-term residential rentals. This only means you can buy only one property and rent it to tenants. When you manage, rental properties could also be an outstanding source of cash flow.
However, you must remember that being a landlord is not a passive income source because it encourages you to exert efforts.
Tenants usually assume that it would be incumbent to regularly keep the property in good standing through upgrades and renovations. Also, it will require you to look for options for advertising your property to those potential renters.
This classification of a building is usually applied to the properties with more than five units. The investors could take out the commercial rather than just the residential loan.
You can enjoy the economies scale. However, you must always be prepared for intense management or hire professionals with real estate licenses and backgrounds in property management.
5. Pre-selling and Re-selling
The pre-selling and re-selling are great ways to earn passive income for real estate, especially if you own condo units. As for the developers, pre-selling means offering units to buyers even before the entire condominium construction process.
This only means that the units are being sold before it’s completed. And since the unit is in construction, the pre-selling prices of units would be lower compared to finished ones.
6. Mixed Use Developments
The demand for mixed-use development projects has also increased in the past few years. It could provide homes for office, residential, retail, institutional, and industrial tenants. With that, investors could enjoy many real estate income streams and even lease lengths within a property.
7. Vacation Rentals
Any property could actually pose a great short-term vacation rental, especially in transient markets. The same thing also goes for tourist attractions. Those investors owning a vacation rental property could usually charge more if it’s a per-night basis than they would with tenants.
But then, remember that vacation rentals also require dealing with issues and cancellations, constant scheduling, paying for household services, and worry about the slow seasons.
Realtors could earn a great passive income if they know how to play their cards right. Many options are available, and just taking proactive actions could help realtors succeed and make a high passive income in the long run.
With the right effort and proper planning, the realtors could create a very successful passive income stream. As long as you know how to get things done, then your career in real estate would be a success.