What is so good about this?
Passive income is money you recieve without having to lift a finger.
I may have said and written about passive income many times, but I'd like to focus on these 3 Ways You CAN Make Your Money Work for you - instead of the other way around.
Invest in Land
Compared to other investments, land doesn’t need much of your involvement. It can be a passive long-term investment for you.
What’s more, you may be able to buy smaller pieces of land with cash alone. Property taxes, insurance or maintenance costs aren’t too high. You can take advantage of negative gearing benefits as well.
Competition is pretty low so you can get a good deal more easily. People with a limited budget can buy now and build later. This ensures that they won’t be priced out of the property market later on.
Although its value may increase quite slowly, land prices can hike overnight. Some people buy land thinking the government will rezone it soon. Once rezoned, the land value increases and they can sell it to a developer.
You can also choose what you want to do with the land. Depending on the situation, you can sell it to a developer or build yourself.
However, investing in raw land can be complicated. Invest only if you know what you’re doing.
Positively Geared Rental Property Investments
Another absolute yes. I have multiple properties that I am renting out and managing myself before I even started Positive Income Properties as a company. They were additionally able to keep the overhead and costs of running this business aside from extra money for me.
Over the past 12 months, this brought in a 10.4% return on our equity. My total time spent on this was limited to recording income and expenses, and exchanging a few emails or text messages with my renters.
Our dual occupancy rental was even better, returning 13% on our equity over the past year. Here my effort was limited to depositing rent checks and sending out lease extensions to our renters.
While most investors rely on the capital gain to make a profit, some hold their properties for long term in which case the properties often become positively geared.
This happens because the rent increases over time however the loan amount does not, so eventually the rent income is more than the holding costs of the property.
Some investors buy properties with exceptionally high rent returns which means they are positively geared from day one. In some cases, these properties experience lower capital growth.
If a good property is picked then it may be possible to get the winning combination of a high growth rate and a high rental return.
Although positively geared properties do not have the same tax benefits of negatively geared property, keep in mind that the goal of investing is to make a profit, not to avoid tax.
For this reason, positively geared properties are excellent investments if they also have high capital growth.
Setting aside the current near-comatose status of the travel industry, my 2 vacation rental units in the Philippines is not costing me anything at the moment. The property developer is the one managing everything and sends me a monthly report of the rental income.
I am going to start listing it in AirBnB where I can get more rental bookings at a fraction of a cost compared to what I pay for the property developer. Just waiting for the time when the travel ban is fully lifted :)
True, this takes a much greater investment upfront, but it does become a truly passive income source, similar to the rental real estate path described above.
Be a smart investor. Investing is a long-term game. At Positive Income Properties, we help people live the lifestyle they deserve.
Talk to us and we can discuss the best move you can make to get a maximised passive income with property investments.
Source: Homeloan Experts