How to earn a passive income from real estate?

In case you do not have your own or a family business, earning passive income is done in two main ways. The first is the purchase of shares from stock exchanges: an option that is not very popular in our latitudes, but also assumes a much higher level of risk in the context of global financial instability.

The second way is the real estate investment: a long-term financial investment with the potential to generate passive profits with minimal effort from the owner’s side. How to earn a passive income from real estate and what to keep in mind during the process? The Atlantis Estates team explains.

Purchase of property for the purpose of renting it out

Buying a property for the purpose of renting it out is the most common strategy for generating passive income from real estate. A common misconception is that the client must have the entire amount to buy the property, and only after that will begin to return its investment by finding tenants.

The truth is that the investment in real estate is often realized with the help of a suitable and profitable mortgage loan. In such cases, it is good to adhere to a generally accepted rule: the installment on the repayment of the mortgage loan should not exceed 30% of the generated passive income. In this way you will pay for your property and will generate additional income that will fully support or insure you, depending on the specific amount.

The profitability of renting a property purchased with own funds can be between 3.5% and 5% depending on various factors. Some of them are depreciation costs, local taxes and fees, the presence of permanent tenants, etc. The facts show that even in the context of an ongoing pandemic, the real estate market remains stable and investing in one usually guarantees good capital gains in the long run.

If your article is interesting, you can get acquainted with the other, nor the material related to the purchase of real estate.

Funds for shared equity of real estate purchases 

Digitalization and facilitated communication between like-minded people is helping to create an entirely new kind for real estate trade. Funds for shared equity of real estate projects are a relatively new phenomenon that allows several investors to make a joint purchase.

In case you do not have enough funds available and you agree to share all future income and expenses with one or more co-owners, these funds will allow you to own a part of a property for a relatively small amount of cash.

Investors in this type of funds decide for themselves in which type of project to invest, then wait for approval and proceed to the legal execution of the deal. This type of "grouping" of co-owners is done thanks to various online platforms. 

Types of real estate with which you can generate passive income

Choosing a property is a key factor that determines whether you will be able to reset the investment and start earning as quickly and as much as you would like.

The main types of properties that enjoy a regular active demand among tenants include:

• Newly built apartments in closed-type residential complexes that guarantee a high quality of life, security, safety and comfort.
  
  
• Single-family and multi-family houses in close proximity to nature, which could be rented out both seasonally and year-round.
  
  
• Studios and penthouses in attractive locations, which guarantee both proximity to the comforts of the city life and privacy in quiet and green areas.
  
  
• Commercial and office premises on the ground floors in busy areas or as part of closed-type buldings with a constant flow of people.
  
  

The real estate market is a relatively dynamic area and the professional advice would never be superfluous. Therefore, the Atlantis Estates team is here to advise its clients on all real estate queries: from the ratio between inflation and property appreciation, to alternatives for generating passive income and ways to finance the real estate deal.

Contact our team of consultants, lawyers and financiers and let us answer all your questions, hesitations and uncertainties. Because the details matter to you, and you matter to us!