In today’s fast-paced world, many people seek ways to make money without necessarily having to actively work for it. Passive income, in particular, has become a buzzword for people seeking to generate revenue with minimal ongoing effort. Property management has long been associated with active responsibilities pertaining to maintaining and managing rental properties. However, there are several ways of earning passive income through property management with less or no effort. As unbelievable as it might sound, here’s how you can do it!
1. Invest in Real Estate Investment Trusts (REITs)
If you’re not ready to dive into the world of direct property ownership and management, Real Estate Investment Trusts (REITs) offer an excellent opportunity to earn passive income with zero effort. REITs are companies that own and operate income-generating properties such as office buildings, shopping malls, and residential apartments. When you invest in a REIT, you are essentially investing in that company and entitled to shares in its earnings, which are usually paid out as dividends.
REITs grant diversification of your investment portfolio and save you from a ton of headaches with respect to property management. You don’t have to search out tenants, deal with repair calls, or collect rent payments yourself. The REIT looks after all the operational responsibilities; all you do is collect your dividend check. Many investors are already using REITs today as a means to establish regular income without having to break a sweat.
2. Invest in Turnkey Rental Properties
Turnkey rental properties are pre-managed investment properties ready for occupation. These properties are fully renovated, with the management of the property, including tenant relations, rent collection, and maintenance, already taken over by a third-party property management company. When you invest in turnkey properties, your involvement is very minimum, as you will be doing little else than collecting your rental income every month.
By investing in a turnkey rental property, you will have a truly passive income with no day-to-day involvement in property management. The property management company takes care of everything for you, from finding tenants to maintenance requests to collecting rent on time. You can literally sit back and enjoy the income from your property without the hassle.
3. Leverage Property Management Companies
Property management companies take up the tiring task of managing all details relating to renting properties for which their owners hire them. Companies of such services tend to collect monthly assessment at approximately 8-10%, though such payment will ensure that they can perform all other tasks, right from marketing of the property, finding tenants, maintenance of it through all queries raised in addition to getting rent money. If one already owns rental properties, a property management company allows an individual to effectively “set it and forget it.”
These companies can also handle more complicated aspects of property management, like legal compliance, evictions, and lease negotiations. For those seeking truly passive income with zero effort, one of the most hands-off ways to ensure your investment continues generating income is to hire a property management company.
4. Use Airbnb and Vacation Rentals with a Management Service
The world of short-term rentals has just opened up with the likes of Airbnb. While managing a short-term rental can be pretty time-consuming, there are management companies that exist to handle everything for you-from listing the property and communication with guests to cleaning the space and addressing any issues during a guest’s stay.
By outsourcing all aspects of the rental process, you can enjoy the benefits of short-term rental income without the headache of managing the property yourself. Some services will even handle things like price optimization to make sure that your property is always rented out at the highest possible price. This is a great passive income generator, and still takes advantage of the high yields offered by short-term vacation rentals.
5. Use Real Estate Crowdfunding
Real estate crowdfunding sites enable you to invest in real estate projects with other investors, thereby allowing you to participate in the management of property with limited interference. These platforms pool funds from multiple investors to finance large-scale commercial or residential properties, and investors receive returns based on their share of the investment.
Most real estate crowdfunding platforms handle all aspects, from acquiring properties to managing and selling them. In your case, you get to select a project, invest your money, and wait for returns. Through these platforms, passive income is possible in the form of dividends, just as it would be with REITs. It is an amazing way to get into real estate without having to own physical property or take an active interest in its management.
6. Make Passive Income with Rent-to-Own Properties
Rent-to-own properties are another superb avenue for passive income. Basically, a person can rent a place with a choice of buying it afterwards. You get regular rents as the property owner, but you have the privilege to sell the property after some time for profit. While you’ll need to make sure the property is properly maintained and that tenants are properly vetted, rent-to-own properties can be a hands-off source of income once everything is set up.
Once the agreement is in place, you can sit back and wait for the payments to come in. It is a great option in case you are not looking for immediate sales but are still looking forward to long-term rentals that generate income, with potential future profits.
7. Buy into Multi-Family Properties
Multi-family properties are an excellent source of passive income, especially if you outsource a property management company for the day-to-day operations. The more units you have, the more rent comes in, and the less work you have to do yourself. Even if one tenant leaves, you still have other tenants paying rent with multi-family properties.
It can also increase your potential rental income while concurrently lowering your overall risk through an investment in multi-family properties. You can earn from multiple rentals with one professional property manager to handle the property without you having to interface with individual tenants directly.
8. Set Up a Lease-Option or Lease Purchase Agreement
Like rent-to-own agreements, lease-option and lease-purchase agreements allow you to collect rent while giving tenants the option to buy the property in the future. These types of agreements usually carry a higher monthly rent and an upfront option fee, boosting your income. If you’re not ready to sell the property outright, these arrangements allow you to continue earning income from the rent while leaving the option open for a future sale.
With a solid lease-option agreement, you might never have to manage the property long-term or deal with the tenant beyond the terms of the lease, providing yet another easy passive income stream.
9. Invest in Mobile Home Parks
Mobile home parks are yet another form of real estate that demands very little effort in managing and generating passive income. In most cases, mobile home park owners own the land but lease the spaces to mobile homeowners. In the case of mobile home parks, you accrue rental income from tenants who rent the land while the tenants maintain their own homes.
Since you’re only leasing the land and not messing around with individual house maintenance, this setup requires hardly any effort from you. You’ll have several tenants paying rent, which translates into one sound passive income stream that demands hardly any intervention on your part.
10. Employ a Full-Service Real Estate Agent
If you’re not sure about managing the properties yourself and want to dip your toes into real estate investment, hiring a full-service real estate agent will ease the process. They could find properties for you, negotiate deals, and even assist in tenant placement and management. You’ll be able to have a hands-off approach in property management while benefiting from their knowledge of the market as they manage the property for you.
Final Thoughts
You can earn a passive income in property management with minimal effort. It is possible to build a dependable income stream with REITs, turnkey rental properties, or mobile home parks, all without the headaches associated with direct property management. You are able to outsource most of the operational aspects either to property management companies or develop and use the technology for an investment that will make passive income generation easy and very lucrative for the long term.
