Passive Income and Ways To Generate It in 2023
Having extra money is always a good idea, right? Making money outside of your day job can boost your wealth and provide you with more peace of mind. You’ve probably heard of passive income and how real estate is a popular method to produce it. Here are some things you should know about using real estate as a passive income source.
Let’s take a closer look at passive income and how you might earn it.
What is Passive Income?
Passive income is defined as income that does not need a significant amount of effort in terms of money, time, and resources. It does not need active participation. You do not need to commit a set number of hours to develop a passive income. Passive income, unlike active income, requires little effort.
Passive income allows you to supplement your income.
In this digital world, there are tons of ways or passive income idea sources. For instance, you can invest in an initial capital investment like Rs.1000, often in the form of a stock, and then acquire a stake in that investment. You earn dividends or other regular income. Because you are not directly managing the investment, this form of income is called passive.
But, out of the many passive income ideas available out there, nothing beats real estate and real estate passive income.
What is Real Estate Passive Income?
Real estate passive income is earned by investing in a real estate project for which you will not manage or run. However, it produces income for you. There are various methods to invest in real estate passively, including acquiring shares in publicly listed real estate-related enterprises. These include real estate development businesses, huge real estate brokers, and construction enterprises. Real Estate Investment Trusts (REITs) are corporations that combine the funds of investors to participate in significant real estate transactions.
How to Make Passive Income Via Investing in Real Estate?
Passive income may be a great method to supplement your present income and generate cash streams to help you plan for your retirement years. One of the most prevalent methods to generate real estate passive income is through rental homes. Investors that play their cards well may make a steady income from rental revenue while simultaneously renovating the property and accumulating equity.
It is often believed that passive income real estate investment requires little to no work. Those seeking passive income from real estate, on the other hand, should take an active role in what should be viewed as a company. Owning passive income properties requires some amount of commitment, whether it is looking for homes, screening tenants, hiring a property manager, or dealing with problems. This is especially true for those seeking to increase their revenues.
However, there are several more methods to invest in real estate with minimal participation. Nonetheless, earn consistent passive income.
Best Ways to Earn Real Estate Passive Income in 2023
- REITs: REITs let investors buy shares, contribute money, and receive monetary value in exchange. The majority of REITs are publicly traded investment options that can be found on major stock exchanges. A REIT’s investment is dispersed throughout a portfolio of real estate holdings. REITs will pay out at least 90% of their earnings in dividends to shareholders. In India, you can invest in REITs by spending Rs. 10,000 to 15,000. Indian REITs like Embassy Office, Mindspace, and Brookfield yield between 7 to 9%.
- Structured Debt: Structured debt allows companies, organizations, and corporations to raise non-dilutive financing. This allows investors to engage in secured high-yield possibilities. The investment is usually a four-year structured instrument that pays monthly interest and returns 25% of the principal each year. For instance, Assetmonk is offering an IRR of 17% with a minimum investment of 10L.
- Real Estate Crowdfunding: Real estate crowdfunding involves a large number of people pooling their money to acquire a home. Many individuals like real estate crowdfunding since it does not require a hefty initial commitment. You may begin with as little as Rs. 25 lacs via real estate crowdfunding platforms like Assetmonk. You can invest in properties directly and choose. Via platforms like Assetmonk, you can generate an IRR of 12-21 % and a rental yield of 8-12%
- Real Estate Syndication: A real estate syndication is a group of investors that combine their funds to purchase a property. Passive real estate syndicate investors are not obliged to be actively involved in property management, accounting, or tenant-related concerns. When you invest in a real estate syndication, you know precisely where your money is going, what asset you’re getting, and, most importantly, who you’re getting it from. Via real estate syndication, you can get 7 – 10% of your annual property rental income.
- Fractional Ownership: A fractional ownership of commercial real estate is where a group of retail investors pool their money to acquire commercial real estate property. Investors become landowners based on the amount of money they invest and the number of investments they make. All investors share the risks and profits. You can invest up to INR 25 lacs in fractional real estate investing. By spending a little sum, you may now co-own that office property and receive yearly rental returns of 6% to 10%. You can also earn an average rental yield of 10%.
So, as you can see there are tons of ways to generate passive income easily. But the best is real estate passive income or passive income from real estate.
You can approach Assetmonk for help in getting started. Earn real estate passive income easily with Assetmonk via fractional ownership and real estate crowdfunding opportunities across institutional-grade properties in India.
Q1. How can I generate passive income?
A. There are numerous passive income ideas. But, if you are searching for a more reliable passive income generator, then real estate is the best. You can invest in a commercial property and generate passive income via rental income and capital appreciation.
Q2. What is passive income in India?
A. Passive income in India is like putting or investing your money in bank fixed deposits or commercial properties.
Q3. Why is passive income important?
A. Passive income allows individuals to enhance their wealth and improve their cash flow, resulting in greater financial stability and security.
Q4. Why is it called passive income?
A. Passive income is income earned with little or zero effort put in. For instance, if you invest in CRE fractional ownership, all you have to do is put in your money. Somebody will manage the property for you and yet you will still get passive income.
Q5. Is passive income taxable in India?
A. Passive income is taxed, but it is taxed differently than your regular income.