Passive income real estate: one of the most important reasons to invest in real estate? The Objectives when buying an investment property are very important. Stand passive income or asset building in the foreground?
Build up passive income or engage in real estate trading
There are many reasons to invest your money in real estate. These can have their cause in the personal situation of the investor or they can be of political nature. Or they can have a financial background. The goal of most investors, however, is in any case to increase their wealth or income.
Some investors already have equity capital in such an amount that they want to protect their financial assets and convert them into real values. Others have less equity at their disposal. They use the leverage common in real estate in the form of bank loans to further build their wealth.
Already in the preliminary considerations for the purchase of an investment property, the investor should ask himself what his real motivation is. For according to this motivation, different real estate strategies, properties and property types may come into consideration.
Security and asset accumulation
Many investors currently feel very insecure due to the current political situation. They tend again more to values, which one can touch and which are in the own access area. Assets held only digitally by globally based companies are increasingly regarded as insecure.
A rented property Today, real estate still offers the advantage of real value, because it exists in reality. And people always have to live. Of course, the value can change upwards or downwards over time. But the building and especially the land remain in place.
Concrete gold
Many investors decide also for purely personal reasons for the Concrete gold. You want to secure existing assets for the heirs and especially the older generation prefers to trust in residential real estate than in funds, shares and co. Those who have owned land in the past, even in times of crisis, generally got back on their feet more quickly after a crisis.
I would like to analyze in more detail below the two biggest motivators with a financial motive:
- Build (monthly) passive income
- Wealth building
Earn monthly passive income with real estate
With the right investment strategy, it is still possible nowadays to generate a monthly to earn money with real estate. If a property is self-supporting, this means that the income from the rented apartment or house is equal to the expenses. The running costs are thus covered by the rent.
However, no surplus is generated. So the landlord has no real income left as an amount in his account every month. Tax advantages are here once out of consideration. After all, these are very dependent on the personal situation of the respective person.
Building passive income through profit on the account
Does the investor manage to make a generated a real surplus with the property, so they can generate an income for which they have to work only minimally. This kind of income we call passive income. It is therefore passive because you don’t have to get up and go to work for it every morning. Of course it is necessary to arrange or regulate something here and there. But the effort is limited.
The surplus on the account arises from the fact that the rental income is higher than the monthly current expenses. So if you buy an attractive income property for which you can charge high rents, you have already fulfilled part of the requirements.
In addition, it is important to keep current expenses low. This works by using a financing strategy optimized for capital investors and selecting an apartment with low management and maintenance costs.
Financial freedom with real estate
If the income is high and the costs are low, then the chances are very good that there will be a profit left in the account every month. This is what we call "passive income with real estate". Depending on the type and size of the property, this can be several hundred euros. And with apartment buildings or a larger number of units, nothing stands in the way of financial freedom.
Build passive income through real estate is time-saving and therefore means a certain monthly basic amount on the account, which is reliably received. Even if you are on vacation in the sun or you devote yourself to other activities. The goal of an investment in concrete gold could therefore often be to secure such an income and to strive for financial freedom.
Wealth accumulation with real estate
Especially the younger generation, born after 1975, has not experienced much of the lush times. We can remember that our parents got 8% interest on savings accounts. And that a father could feed his family and pay off a house on the side with his normal full-time job. What has remained of it?
Nowadays, times are different and especially the Wealth accumulation has become much more difficult. Even if in the Internet age a few make the big breakthrough with a single sophisticated idea… the majority finds it difficult to invest the hard-earned money so that it is secured and increases noticeably. By simply "parking" on savings and call money accounts nobody will advance his wealth accumulation nowadays, on the contrary. Inflation is higher than the interest on the capital.
In real estate investments I still see a great potential to increase his money really noticeable. Of course, it is not enough to just buy any apartment and wait two years, then sell it again at a profit. As with any income, a certain amount of work has to be done and care has to be exercised.
Real estate trade
Whoever acquires the necessary knowledge and understanding, as well as invests a little time, still has the opportunity today, through Buying and selling real estate to earn good money. Thus, just by reselling a single apartment, an amount can be earned for which others go to work for a whole year. Here are quite different considerations than for long-term passive income.
For this purpose, the regional real estate market should first be scrutinized. Is there still potential for increase here? How have the rents and the purchase prices developed in the last years? How much and how long will I have to invest in order to be able to sell my investment property at a profit?? Is it still worthwhile even after the tax consideration? These and other questions are to be clarified, before a capital investment real estate is acquired.
Upgrading and selling
Another possibility is also to Acquiring real estate, upgrading it and then selling it at a profit. This works very well with multi-family houses, if one knows also building-technically or can fall back here on reliable partners. By skillful upgrading and if necessary also dividing into residential property profits are possible, which are to be generated otherwise with difficulty. However, if you don’t have any experience with real estate, you should first buy a simple condominium and rent it out (more on redevelopment properties for beginners).
But even with the condominium, a simple appreciation is often possible. On the first floor the terrace can be enlarged, on the other floors a balcony can be added (of course with the consent of the community). Or parking spaces can be created on the property, which are then rented to tenants for a fee. In the same way, it is also possible to charge a higher rent by upgrading the facilities, for example by renovating the bathroom or kitchen.
The royal road: The combination of both!
Whoever manages to acquire an investment property, earn a passive income with it for a few years and then sell it at a high profit, has taken the high road! Even such real estate investments are still possible today! And if you implement this successfully a few times, you will have built up a significant amount of wealth.
Of course, this requires a good groundwork and a minimum of know-how. Compared to other ways of generating income, however, this effort is worth it! And, as we all know, you learn by experience, so why wait?? Building passive income pays off, so start right NOW!
And here is more information about real estate returns, passive income with real estate and wealth building.
Earn passive income with real estate
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Further links
You can find more about investing in real estate on the home page and in the blog. At Jeder-kann-Immobilien there are also various products for self-learning as well as a real estate coaching with Stefanie Schadel.