The Best Way to Make Passive Income in Real Estate

After working hard for your money and collecting it in your bank account, you’ve got the opportunity to make your money work hard for you. Or at least do some light labour to earn a little bit more on the side.

Passive income refers to the money one earns through little effort. In most cases, passive income requires already having money to net more. While there are a variety of means to earn passive income, the most common way to do so is through real estate, where investing in a property can yield returns in both the short and long term. There are a few different methods to earn passive income through real estate, even for those who feel shut out by the real estate market.

Passive Income in Real Estate

REITs, crowdfunding and property ownership all allow the possibility of passive income. But which one is the best for you?

How does a REIT work?

A real estate investment investment trust is a company that collects money from investors to funnel into a portfolio of income-generating properties. Individuals participating in a REIT do not need to involve themselves in the properties in any way – they won’t even know the exact properties they are invested in.

REITs may be specialized or diversified; most deal in equity though some hold mortgages. Most are public and liquid, allowing investors to buy and sell as they desire. addy, notably, is not a REIT.

How does crowdfunded real estate work?

Instead, addy operates by crowdfunding real estate, in which specific, known properties are invested into by a group of people. Many parties investing together means that both the investment and risk is lowered across the board. addy enables members to invest in specific properties for as little as $1.

Unlike a REIT, crowdfunding with addy does not allow investors to buy and sell shares. Once an investment is made, members simply wait for the proposed plan to unfold until a time when a  potential return is earned.

How does property ownership work?

Owning property has the potential to be a great means of passive income, but it comes with a lot of caveats. Owning property may require work, maintenance and management depending on a number of factors. The age and quality of the structure, the number of tenants, and the location can influence how much money the property can earn, and how much it costs to operate, turning passive income into very active and involved income. An entire building, single apartment or even a lone room may be rented out for either short term or long term stays to earn passive income.

For most millennials and Gen Zers, however, owning property is a distant dream. Passive income through ownership works best if you already own a piece of property. First-time buyers are confronted with rising prices across Canada and a low supply that’s leading to bidding wars. High down payments and increasing interest rates are shutting out younger generations from owning a home.

addy benefits

addy’s crowdfunding platform is simple and accessible; members can invest in a specific property for as little as $1 achieving the dream of ownership and the pride – and passive income – that comes with it. There are no requirements or thresholds concerning financial history or education backgrounds; anyone of age can become a member quickly and easily. A forthcoming iOS app and the addyverse – will make the entire process even more convenient!

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