If someone were to pay you $1,000 or more a month to sit on your couch and do nothing, you’d probably take the gig, right? After all, there’s nothing better than getting to earn money without having to lift a finger.
If that idea sounds good to you, here’s something you should know. Investing in real estate could be your ticket to generating $1,000 or more per month in passive income.
Now, if you’re thinking “Wait a minute — I don’t want to go out and purchase a rental property” — I wouldn’t blame you. While an income property could be a great way to generate ongoing cash, it’s easy to argue that managing a rental really isn’t passive income, because you’re doing the job of a landlord for what could be many hours a week.
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And besides, owning physical real estate carries risk. You could incur thousands of dollars in damage if a tenant wrecks your home. Or a weather event could leave you on the hook for countless repair bills.
That’s why REITs really are a much better source of passive income within the realm of real estate. And so if you like the idea of sitting back, doing nothing, and making money, then it pays to add them to your portfolio.
The benefit of REITs
REITs, or real estate investment trusts, are companies that make money by operating portfolios of properties. Industrial REITs, for example, own warehousing space they can lease out to generate revenue.
When you invest money in REITs, you get to buy into real estate without owning any property yourself. That means you don’t directly assume the same risks you’d face if your name were on the deed to a house or building.
Meanwhile, the benefit of REITs is that they offer you two ways to make money. First, your REIT shares could gain value over time, the same way that can happen when you buy regular stocks. But the second way you can make money is via dividend payments, and that’s where the whole passive income thing comes in.
REITs are required to pay at least 90% of their taxable income to shareholders as dividends. As such, they tend to pay higher dividends than most stocks.If you load up on REITs, you may reach the point where your portfolio is generating $1,000 or more per month of dividend income. And from there, all you need to do is decide what to do with it (hint: reinvesting is probably …….