We’ve all had conversations concerning how we can get away from the cyclical nature of a 9 to 5 job. And in those conversations surrounding financial freedom, we have most likely heard of the term ‘passive income’.
So what exactly is passive income? Passive income is usually defined as money that is earned without putting in a lot of effort. This definition however, can seem a tad misleading, since a lot of work is definitely put into creating passive sources of income. Rehashing this definition, we can define passive income as cash flow that is generated without a huge amount of direct intervention.
Reasons to Invest in Real Estate
Investing in real estate, or property investment as it’s more commonly known nowadays, is a good way to create passive income by renting, or buying properties at a low price and selling them when the demand increases. Below are a few reasons why property investment is good for first timers to the passive income biz:
More Stable than the Stock Market
There are a lot of different ways to earn passive income. You might even hear people talk about things like investing in stocks as a way to earn passive income. Although real estate market trends vary from time to time like investing in stocks can provide a high payoff, the risks run equally high, if not higher. So for a person who has yet to start dabbling in passive income, stock investment can be a bit too risky, and might end up turning them off should the market go south. Property investment, on the other hand, is a great way to earn passive income without the ubiquitously high risks of stock investment.
What’s great about property investment is that regardless of how the housing market can be, the value of your property will improve as the market conditions also improve. When the market conditions are not so great you don’t lose your property, so you don’t necessarily have to demolish the property or sell it immediately. Stocks, on the other hand, might even cause you to lose your entire investment should the stocks you invested in go sour.
There Will Always be Demand
Regardless of market conditions, there will always be a demand for real estate properties. People will always need a place to live. You are likely to get a better return on investment if you can purchase a property in one of the top 10 neighborhoods to live in.
Whether it’s a huge house, a studio unit, or a rental property, there will always be people looking to find a roof to live under.
Offers Tangible Asset Value
It’s very easy for assets to become liabilities over time, since the usefulness of an asset can decrease due to wear and tear. Cars are a very good example of assets that depreciate over time. Properties, however, will always have tangible asset values that will not zero out since there is always value for land, or that home that you have built on it. As long as you protect it with home owners insurance, your assets will always be protected so you don’t lose out on your investments.
Earning passive income is not always for the faint-hearted, and it is definitely not for the lazy. If you’re interested in investing in property but have time constraints, you should consider investing smartly. If you don’t know where to start, a property investment company like Smart Property can provide you with a host of tools and services to help first-timers like you invest in properties that can net you a good amount of income over time. They use market and property data to help you make a really good decision for your investment. If possible, book a strategy session on their website and try out any free tools they may offer to see if property investment is right for you.