Written in partnership with Ascend
Photo Credit: J. Scott Scheel
Many real estate investors in the United States know J. Scott Scheel as the go-to person on real estate investing expertise. The successful entrepreneur and real estate mogul’s influence in the real estate industry go beyond the property markets. He has also succeeded in his other ventures, including film production, print & digital publishing, development & management, commercial finance, internet marketing, transport, and energy resources. He uses his influence and vast business experience to impact other people’s lives by educating them on generating and growing wealth with tested and verified finance practices and principles. Among the many ways he teaches to make income and grow wealth include having a passive income.
Passive income refers to any revenue made without having to participate actively. In simple terms, it is income gained without having to trade your time for money. Do not get us wrong there is work involved such as identifying and setting up the business, but all of this is done upfront. Passive income plays a vital role in wealth creation and building a financial freedom life.
Everyone wants to make money while their asleep, on vacation, or even taking the kids to the playgrounds. This income boosts the realization of retirement plans, reaches financial goals, grows savings, and most importantly replaces the active income. No matter how much one loves their job, a passive income will always be an added benefit. Although there are numerous ways to earn a passive income, the real estate sector still tops the chart. The various ways to generate passive income from real estate include:
Renting out property
Rental income is the first thing that comes to many people’s minds when real estate passive income is mentioned. Passive income from renting property is classified into residential and commercial rental property. The leasing of property can either be on a short- or long-term basis. Some rental activity includes single rental, an apartment complex, office space, and an industrial building.
The real estate investment trust (REIT) dividends
REITs are privately or publicly traded companies that combine investors’ funds to obtain and manage numerous commercial real estate properties. Firms designated as real estate investment trusts are mandated to pay at least 90% of their taxable revenues to their shareholders in return for tax benefits. The key to note is that income from REIT dividends is subjected to the capital gain as portfolio income.
Crowdfunding
Another way to earn passive income from real estate is through crowdfunding. Multiple accredited investors combine forces by pooling funds and empowering a third party to buy and manage an investment property. Passive income from this venture varies according to the nature of the sponsor’s project and structure. Therefore, creating the need to carefully select the best investment plan as some do not pay returns regularly.
Real estate exchange-traded fund (ETF) dividends
A real estate exchange fund is simply a diversified REIT. Apart from buying shares from one real estate investment trust, an ETF allows for buying shares from different REITs. There are professional fund managers that guide investors on where to put their money.
Performing mortgage notes
Mortgages are secured loans given by financial institutions for the sole purpose of financing property. Upon establishing the property, the buyer repays the loan monthly, principal plus interest. The lender does not actively participate in managing the property. If the mortgage is fully paid, the buyer takes full ownership of the property.
Real estate provides various passive income streams that allow for easy wealth accumulation, work is still involved, and returns are not 100% guaranteed. Most work goes into examining the opportunity to establish its viability before investing. With successful pioneers such as J. Scott Scheel, success goes to those who seek the best advice.
