There’s nothing wrong with taking the traditional route in investment options, like stocks, bonds or mutual funds as they typically deliver a return of 5-7%, which is better than nothing. At the same time, the investor doesn’t have much control over what happens in the stock market — success there is often determined by your reaction.
On the other hand, there are passive investment options that do allow you to have more control and, therefore, a greater return. One of the best options for passive income is real estate investing, and it is also a prime example of an asset with multiple income streams.
Real estate generates passive income for the investor in the following ways:
1. Cash flow: Cash flow is straightforward: When you purchase a rental property as a real estate investment, the tenants pay a monthly rent. The rent cost is usually higher than the monthly mortgage payment, even in today’s market. The difference in the rent and mortgage payment produces an instant and consistent cash flow.
2. Equity capture or ‘instant equity’: Although it is difficult in today’s market, if you can find a property below market value and the appraisal comes in higher than your purchase price, you are positioned to acquire equity capture or “instant equity.” You could also turn around and sell the property for some quick change or hold and let it mature. Such a circumstance is possible in growing markets, like the Dallas-Fort Worth (DFW) metro area. The economy is steadfast…