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What Is Passive Real Estate Investing?

What Is Passive Real Estate Investing?Passive real estate investing refers to an investment strategy where an individual invests in real estate assets without being actively involved in the management of those assets. In passive real estate investing, an investor typically provides funds for a real estate project, such as a rental property or commercial development, and receives a return on investment based on the performance of that project.

Passive real estate investing can take various forms, such as investing in real estate investment trusts (REITs), crowdfunding platforms, or private real estate funds. These investment vehicles allow investors to access real estate investments without the need to purchase and manage properties themselves.

Ways To Get Involved In Passive Real Estate Investing

It is important to thoroughly research and understand the risks associated with any real estate investment before committing funds. There are several ways to get involved in passive real estate investing, including:

Real Estate Investment Trusts (REITs): REITs are investment vehicles that own and manage income-generating real estate properties. Investors can buy shares in a publicly traded REIT, which typically pays dividends based on the rental income generated by its properties.

Real Estate Crowdfunding Platforms: Real estate crowdfunding platforms allow investors to pool their funds with other investors to invest in a specific real estate project. Investors can choose which projects to invest in and typically receive a return based on the project’s performance.

Private Real Estate Funds: Private real estate funds are investment funds that pool capital from multiple investors to invest in real estate properties. These funds are managed by a professional team that is responsible for identifying and managing the properties in the fund’s portfolio.

Real Estate ETFs: Exchange-traded funds (ETFs) are similar to REITs in that they invest in real estate properties, but they are traded like stocks on an exchange. Real estate ETFs provide investors with exposure to the real estate market while offering liquidity and diversification.

Rental Properties: While owning rental properties may require some level of active management, investors can hire property managers to handle day-to-day tasks such as finding tenants, collecting rent, and maintenance. Rental properties can provide investors with passive income through rental income and the potential for capital appreciation.

Passive real estate investing is often considered a way to diversify an investment portfolio and generate passive income, as real estate investments can provide regular cash flow through rental income or dividends. It is important to research and understand the risks associated with any real estate investment before investing. Consider consulting with a financial advisor to determine which type of passive real estate investment is best suited to your investment goals and risk tolerance.

If You're A Landlord, You Need A Landlord Insurance Policy

Landlord rental insuranceThe ranks of the landlords are growing. Along with an increasing number of “accidental landlords”, real estate investors now account for close to 20 percent of all home resales, according to the National Association of REALTORS®.

If you plan to buy a rental property in Corpus Christi , or to convert your current residence for long-term rental, make sure your home is properly insured.

A traditional homeowners insurance policy may be unsuitable for landlords.

A landlord insurance policy typically covers the home itself; the owner’s possessions in the home; structures on the land including garages and sheds; and, minimal liability coverage in the event of injury or lawsuit.

It’s common for landlords to increase that minimal liability coverage, adding an umbrella policy for $1,000,000 or more. Umbrella policies protect your home from an unfavorable lawsuit related to just about anything — housing-related or not. 

Optionally, a policy may includes provisions for “lost rental income”.

Annual premiums for a landlord insurance policy are often 20% more costly than for a standard homeowners policy. This puts the average landlord insurance premium near $950 per year.

Premiums vary by state, too. The top 3 most expensive states in which to insure a rented home are:

  • Texas : $1,752 per year
  • Florida : $1,668 per year
  • Louisiana : $1,386 per year

At $464 per year, Idaho is the least expensive state in which to hold a landlord insurance policy.

Talk with your insurance agent about your insurance options as a landlord. There are tens of choices and coverages from which you can choose. Let a professional help you pick the best choice.