Property Location

F.E. Zuellig Avenue, Mandaue City, Cebu, Philippines

house beside stack of coins

How to Earn Passive Income from Real Estate: A Quick Guide

Are you looking for a new investment? Then, look no further than real estate—it’s one of the most lucrative assets to add to your portfolio. Land, houses, condo units, and other buildings appreciate over time and often rapidly, providing an excellent hedge against inflation. In fact, CEIC Data reports that residential real estate prices have increased over the past decade in the Philippines. As such, it’s a critical asset for building wealth faster.

Passive income in real estate is another good reason to invest in a house or a condo. You don’t have to sell and receive a one-time payout; instead, you can constantly earn money and make your investment more rewarding in the long term. Here’s what you need to know about real estate money-making opportunities or how to invest in real estate for passive income to build wealth.

What is Passive Income in Real Estate?

Passive income in real estate refers to the revenue you generate from a real estate investment without active involvement in its daily operations. Even with minimal time and effort, you can earn income regularly and consistently from your property.

A common way to earn passive income in real estate is via rentals. You acquire a property, rent it to tenants, and receive periodic rental payments. Although this setup involves management and maintenance responsibilities, outsourcing them to a property manager reduces your workload.

3 Benefits of Passive Real Estate Investing

Real estate is a highly lucrative investment opportunity, as are other ventures. So, what makes real estate better than alternative passive income sources?

  • Less capital requirement

You can invest in real estate and earn passive income even if you don’t have significant capital. Government entities, such as the Home Development Mutual Fund or Pag-IBIG, offer housing loans with low-interest fees for low-income Filipinos, allowing you to acquire residential properties on a low initial budget. 

You could also leverage crowdfunding or real estate investment trusts (REITs), which enable you to pool resources with other investors to purchase income-generating properties.

  • Better liquidity

The real estate market tends to be more stable and less prone to rapid fluctuations compared to, say, stocks and cryptocurrency. As such, you can mitigate risks effectively when investing to earn passive income. Market predictability makes it easier to forecast incoming liabilities, allowing you to identify strategic entry and exit points.

Property investment also provides a consistent cash flow and requires less effort since you don’t have to manage it directly. This advantage offers better liquidity, minimizing the impact of liability and risk.

  • Minimal effort 

Many investors assume that real estate is a labor-intensive asset. After all, property management and maintenance can be challenging, especially if you’re handling numerous tenants. However, you don’t have to do the job if you lack adequate skills, resources, or time.

Hiring property management companies is an excellent option for landlords who prefer to focus on other assets and endeavors. If you own a single-family home, you could employ a property manager to oversee your unit’s daily operations and perform essential maintenance.

How to Invest in Real Estate for Passive Income

Understanding how to invest in real estate to earn passive income helps you maximize this opportunity to build wealth. Here are some of the best investment choices for experienced and first-time landlords.

  • Remote real estate ownership

Do you want to invest in an income-generating property far from your residence? Then, consider becoming a remote landlord. This setup allows you to invest in a real estate market in a different city, town, or province and tap into its opportunities. 

As for the upkeep, you may rely on a property manager to handle its daily operations, such as tenant screening, rent collection, and maintenance. You could also contact your tenants via a property management system for a more efficient workflow.

  • Real estate investment trust (REIT)

REITs are companies owning and managing a portfolio of income-generating properties. In this setup, you act as a shareholder who earns dividends from the REIT’s returns. The benefit of leveraging this approach is that it lets you invest in real estate without directly owning properties, enabling you to mitigate common risks in the industry.

However, remember that investing via REITs provides less value than owning a property since you share the profits with shareholders. Still, it’s an excellent choice to test out the waters of the real estate market and do away with liabilities.

  • Short-term vacation rental

Tap into the growing market for vacation homes by leveraging online rental platforms and marketplaces, like Airbnb and Facebook Marketplace, to generate rental income on a short-term basis. This approach is particularly lucrative for properties in tourist destinations and areas with high demand for temporary accommodation. 

Note that this investment strategy may require more involvement than others, so consider hiring a property manager to handle your rental business’s administrative aspects.

  • Long-term residential lease

Purchasing and renting out a property for long periods, commonly years, can provide a stable income. It reduces the need for frequent tenant turnovers or constant worrying about finding new, well-behaved tenants. You also don’t have to hire a property manager since tenant screening and upkeep are minimal, reducing your expenses.

Build Wealth with Passive Real Estate Investments

Real estate offers excellent opportunities to generate a consistent cash flow with minimal involvement in the business. As such, you can focus on leisure, your loved ones, or growing your other assets. Then again, it’s also essential to recognize that passive real estate investing carries risks, but careful planning and research can help you maximize it to achieve lasting financial stability.

If you’re looking for condos for sale in Cebu as a passive income source, Mandani Bay is a great choice. Located in the bustling metropolis of Cebu City, our property offers luxurious condo living and an exceptional lifestyle that provide great value as an investment.

Contact us today to learn more!