Making passive income from real estate investment: 4 myths debunked

Most people are drawn to real estate investment with the notion that it will help them make passive income. They would get to live their dream of a house on the beach, while their investment in real estate will take care of their daily lifestyle expenses. The hard reality, however, is that it doesn’t happen that way. Before we explain how you can make your income from real estate investment passive in the true sense of the word, let’s discuss five myths that most people carry in their minds when investing in real estate.

Myth#1: There is no learning curve

Even before you buy a real estate investment property, you have to learn a lot of investment formulas to ensure that you are able to spot a good deal whenever it comes your way. You will need to learn investment metrics such as cap rate, cash flow, cash on cash return, internal rate of return, net present value etc. Many newbie investors end up spending thousands of dollars on real estate investment courses, mastermind classes and mentorship.

You also need to keep a hawk eye on the latest market trends and spend hours every day on fluctuating property prices, inventory, pending sales etc.

Myth#2: There is no work

Most newbie investors believe that finding an investment property is a piece of cake. The reality is quite different. You have to go the extra mile to ensure you are investing in a good deal. If you don’t do this, you won’t make any money. In other words, you have to chase foreclosure listings, Real Estate Owned (REO) listings and short sale listings on a regular basis. You will need to attend auctions. You will also need to have great negotiation skills.

A serious shortage of inventory has increased competition in the housing markets in the U.S. So you have to be financially prepared to beat the competition. Most real estate investors are cash buyers and try to close the deal in a matter of a few days. If you are relying on a mortgage to buy a home, you will find it very difficult to win the bidding wars.

Myth#3: You can relax as soon as you buy an investment property

You can’t relax even after getting a great deal. Now you need to race against time to make your investment profitable (Related article: Real estate investment timeline: Why is it important?). If you are planning to sell the property for a profit in a fix-and-flip project, you will need to undertake a renovation project. You will hire contractors. You will have to ensure that you complete the project on time and within your budget. You have to invest only in those upgrades that would add value, in other words increase the value of the property. For someone not experienced in construction, this is very difficult to achieve. Renovation project can turn into a money pit.

Once you complete the project, you will need to find a buyer immediately to avoid carrying costs such as maintenance, insurance, utilities, mortgage insurance etc.

If you are planning to turn the property into a rental, you will be responsible for its management. Even if you hire a property manager, you will realize that landlording is almost a full time job.

Myth#4: your income is consistent and predictable

In a buy-and-hold investment strategy, your returns are greatly affected by vacancy rates, any fluctuation in prices and unexpected expenses related to maintenance and upkeep. If a tenant moves out of your single family investment property or condo, you will have a 100% vacancy rate. In that case, you won’t make any money until the house is occupied again.

So how to make your income from real estate investment truly passive?

What if there is an investment program which has no learning curve? You don’t have to find an investment property or get involved in a renovation project. And your income is consistent and predicable. Sounds great, right?

Well, Buyer Investor Match offers Mailbox Money investment program that will help you leverage your credit score. All you need to do is get an investment loan from a bank. You will receive a fixed amount of money in your virtual mailbox without you having to leave your home or even drive to the bank. An investment deal is handed to you on a silver platter.

Interested in learning more about the Mailbox Money program? Fill up the form below and receive a free e-book explaining what the program is and how it can help you make passive income – month after month, year after year.