Learn how to earn income passively with real estate investing strategies like REITs, fractional investing, turnkey properties, and crowdfunding.
Passive Real Estate Investing
Investing in real estate is a well-known way to build wealth, but not everyone has the time or desire to actively manage properties. That’s where passive real estate investing comes in. With passive strategies, you may benefit from real estate without the day-to-day responsibilities, making it an ideal choice for those who want to diversify their investments without the hassle of property management. In this article, we’ll explore what passive real estate investing is, the different strategies available, and how you can get started.
What is Passive Real Estate Investing?
Passive real estate investing allows you to invest in real estate while leaving the management and operational responsibilities to professionals. This approach is perfect for investors who want the benefits of real estate—such as income, diversification, and potential appreciation—but don’t want to deal with tenants, property maintenance, or market analysis.
Popular Passive Real Estate Investment Strategies
Passive Real Estate Investment Strategy
Description
Potential Benefits
Considerations
REITs (Real Estate Investment Trusts)
Invest in companies that own, operate, or finance income-producing properties. Shares are traded like stocks, allowing you to diversify quickly.
High liquidity
Low barrier to entry
Instant diversification
Less control over property selection
Dividends taxed as ordinary income
Fractional Real Estate Investing
Buy shares of specific properties to earn rental income and benefit from property appreciation without management responsibilities.
Low entry cost (as little as $100)
Quarterly dividends from rental income and appreciation
Less control over property management
Turnkey Properties
Buy fully renovated, ready-to-rent homes managed by professionals, allowing you to earn rental income immediately.
Immediate rental income
No involvement in management or renovation
Higher upfront cost compared to fractional investing
Real Estate Crowdfunding
Pool money with other investors to fund large real estate projects, like commercial buildings or multifamily developments.
Access to large-scale projects
Potentially high returns
Lower liquidity
Higher risk depending on the project's success
1. REITs (Real Estate Investment Trusts)
REITs
REITs allow investors to buy shares in companies that own, operate, or finance income-producing real estate. Investors don’t have to select individual properties and instead can buy an array of properties all at once, allowing them to diversify quickly. REITs also tend to offer high liquidity, as they are traded like stocks, making it easy to buy and sell your shares.
2. Fractional Real Estate Investing
Fractional real estate investing allows individuals to buy shares of specific properties. Platforms like Realbricks offer this option, allowing you to earn rental income and benefit from potential property appreciation without the hassle of property management. With Realbricks, you can start investing with just $100, and investors benefit from estimated dividend yields from highly vetted long-term rental properties.
3. Turnkey Properties
Turnkey Real Estate
Turnkey properties are fully renovated, ready-to-rent homes managed by professionals. Investors purchase these properties and start earning rental income immediately, without needing to handle the renovation or tenant management processes. It’s a hands-off approach to real estate that still provides rental income, making it ideal for those who want passive income without involvement in the day-to-day operations.
4. Real Estate Crowdfunding
Real Estate Crowdfunding
Crowdfunding platforms pool money from multiple investors to fund larger real estate projects, like commercial buildings or multi-family developments. While crowdfunding offers a way to invest in large-scale properties, it often lacks liquidity, making it more challenging to sell your shares. Additionally, these platforms tend to carry higher risks, as the success of the project relies on various external factors, and the success of your investment depends on the success of the project itself.
Benefits of Passive Real Estate Investing
Minimal Time Commitment: Passive investments require little to no day-to-day involvement, making them perfect for busy professionals who want to add real estate to their portfolio without sacrificing time.
Diversification: Passive investing allows you to diversify your portfolio beyond traditional assets like stocks and bonds. Real estate can offer stable cash flow and act as a hedge against inflation.
Professional Management: With passive strategies, professionals handle property management, tenant relations, and maintenance, reducing the risks and headaches associated with being a landlord.
Consistent Cash Flow: Many passive real estate investments, such as REITs, fractional properties, and turnkey properties, provide regular income through rent or dividends.
Low Barrier to Entry: Platforms like Realbricks allow you to start investing in real estate with as little as $100, making real estate investing accessible to a broader range of people.
Scalability: You can grow your investment portfolio over time, adding more properties or shares without increasing your personal involvement in managing properties.
Passive Real Estate Investing
How to Get Started with Passive Real Estate Investing
Step 1: Browse and Choose Your Investments Begin by exploring the Realbricks marketplace, where you’ll find a selection of curated long-term rental properties. Each listing includes detailed property information to help you evaluate opportunities based on your personal financial goals and risk considerations.
Step 2: Buy Shares After selecting a property, you can purchase shares in that individual home. Choose an investment amount that fits your budget, with minimum investments starting at $100. Realbricks manages the operational aspects associated with the property.
Step 3: Participate in Ongoing Performance As a shareholder, you participate in the property’s ongoing performance over time, which may include distributions from rental operations and changes in property value, subject to market conditions and platform terms.
Investors may receive quarterly distributions generated from rental operations, subject to property performance and platform terms. Over time, shareholders are exposed to changes in property value and participate in the property’s overall performance through a long-term holding approach.
Frequently Asked Questions (FAQs)
What is the difference between passive and active real estate investing?
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Active real estate investing involves direct participation in managing a property—such as overseeing tenants, maintenance, and other day-to-day responsibilities. Passive investing, on the other hand, allows you to invest in real estate without managing these tasks, as the property management is handled by professionals.
How much money do I need to start passive real estate investing?
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The amount of capital required depends on the investment strategy. For example, you can start with as little as a few hundred dollars when investing in REITs or crowdfunding platforms. With Realbricks, you can start investing with just $100, allowing you to get started with a smaller amount compared to traditional real estate investments.
Are passive real estate investments safe?
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Like any investment, passive real estate investments come with risks. However, they tend to offer a more stable return compared to other high-risk investments, especially if you choose diversified and well-managed assets. It's important to research each opportunity thoroughly and understand the risks involved before investing. Platforms like Realbricks, which is fully regulated by the SEC, provide added security and transparency, ensuring that all investments comply with strict regulatory standards.
Can I lose money in passive real estate investing?
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Yes, there is always a risk of losing money with any investment. Factors like market fluctuations, property devaluation, or poor management can affect returns. However, passive real estate investments are generally considered safer than direct real estate ownership due to professional management and diversification options.
How do I earn money with passive real estate investments?
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You can earn income in a variety of ways depending on the strategy you choose. With Realbricks, investors benefit from an estimated dividend yield of 6%, and Omaha property appreciation averages 5.3% annually. While there are no guarantees, Realbricks conducts thorough research and carefully vets each property using a series of factors to help optimize returns for investors. This approach helps maximize the potential for both rental income and property appreciation.
Can I sell my shares or investment easily?
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Liquidity varies depending on the platform and investment structure. Publicly traded REITs, for example, are bought and sold on stock exchanges and generally offer higher liquidity. By contrast, many crowdfunding or fractional real estate platforms involve longer holding periods, and the ability to exit an investment may be limited.
Realbricks is developing a peer-to-peer share exchange intended to provide an additional liquidity option for investors, where sell orders may be placed and matched with buy orders from other participants, subject to platform rules and regulatory requirements. The release of this feature is currently targeted for the first half of 2026; however, timing and availability may change.
How do I choose the right passive real estate investment strategy?
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Choosing the right passive real estate strategy depends on your financial goals, risk tolerance, and desired level of involvement.
REITs offer exposure to real estate through publicly traded securities and may appeal to investors who prefer not to evaluate individual properties. Fractional real estate investing allows investors to review and select specific properties, offering greater visibility into individual assets. Crowdfunding platforms may also provide access to real estate opportunities, though investment structures, holding periods, and liquidity can vary by platform.
Each approach involves different considerations related to diversification, transparency, liquidity, and risk, so it’s important to review offering materials and understand how each structure aligns with your personal objectives.
Conclusion
Passive real estate investing offers a hassle-free way to diversify your investment portfolio, generate income, and benefit from property appreciation. With options ranging from REITs to fractional real estate investing to turnkey properties, there are many ways to participate in real estate without the burden of hands-on management. Start exploring passive real estate opportunities today and see how they can help you achieve your financial goals.
Disclaimer: Investing in real estate involves risks, including the potential loss of capital. This content is for informational purposes only and is not intended as investment advice. Investors should perform their own research and consult with financial professionals before making investment decisions.