Which Actual Property Aspect Hustle Is Proper For You?
As you probably know, I believe that investing in real estate is one of the best ways to generate passive income and ultimately achieve financial independence.
There are many, many opportunities to invest in real estateand the decision on how exactly to invest depends on many factors. For example, some people make real estate a full time job, devoting many hours a day. Others work a handful of hours a quarter and still bring in a decent chunk of monthly income.
If you've been interested in real estate investing but don't know where to start, the best way to test the water is to use real estate as a sideline to increase the income of your “day job”.
And if you haven't even thought about a sideline, don't worry. We will discuss that too.
Is Real Estate Investing The Perfect Sideline For Doctors? Let's take a look at why it might or might not work for you.
Why a sideline?
Before we dive into all of the options for setting up a real estate side business, let's see why you might even consider a side business.
The modern medical field is in a state of constant fluctuation. Debt is rising, regulations seem to change almost weekly, and it is an understatement to say that job security is not what it was for me.
As a result, Many doctors turn to additional routes not only to supplement their income, but also to achieve a level of financial security that their daily work simply does not offer.
Even if you find yourself in a stable position, outside employment can be a great way to keep your mind occupied outside of work and generate extra income by doing something that you are passionate about.
If complete financial independence is your goal, a side business can speed your journey by providing streams of passive income. One day you may wake up to see what was once considered a hobby to cover all of your monthly expenses so your day job is completely optional.
If any of these reasons resonate with you, let's examine how people use real estate as an additional source of income.
A long time ago (2014) I made my first real estate investment through a crowdfunding platform. Despite the fear that any first-time investor will likely go through, I made the jump with only $ 5,000 and never looked back.
In case you are not familiar, here is a brief summary of crowdfunding: Many investors come together and invest in a property (single family home, apartment building, commercial area, etc.) by combining their capital. All of this is facilitated by a third party online platform. In essence, you are the bank offering the loan. You agree to certain conditions and receive a monthly distribution.
Crowdfunding is ideal for someone who wants to start small and see what it's about as it usually has a low barrier to entry (say, $ 5,000), has slightly lower risk, and generates high average returns.
Of course, there is still risk and, as with any investment, it is important to conduct thorough due diligence. Fortunately, many platforms make this a little easier by carefully reviewing their businesses and offering comprehensive risk assessments.
The only other possible downside is that some of these platforms require it accredited.
A detailed list of the crowdfunding websites I recommend can be found here Check out this list.
When real estate investments consist of a spectrum (and it does), with managing your own property on one end (very active), Real Estate Investment Trusts (REITs) are on the other end (completely passive).
REITs are essentially a fund that includes many different real estate assets. The entry barrier is extremely low at around 12 basis points, the investment is very liquid and the return can better than investing in the stock market.
However, most REITs have some correlation with the stock market, so returns can fluctuate significantly. Still, they're a great option for someone who wants to add some degree of diversity to their investments while remaining 100% passive.
If you've ever turned on HGTV, you will be familiar with the concept of house flipping. It has some appeal after all – finding a fixer-upper, improving it by spending some time and creative energy, and then selling it for a decent profit.
In theory, it's great and works well for a lot of people. The downside is that this method is extremely convenient, and while the returns can be substantial, it can be very risky.
Performing a successful fix-and-flip operation requires knowledge and skills that can take years to master. It also requires a large amount of capital to buy the home and cover any necessary renovations.
While this option is dangerously close to being outside the "Side Hustle" category, there are people who make it (and why it's on this list).
If you think you have a passion for it, this could be a great way to get rid of some elbow fat. However, it is important that you know what you are getting yourself into.
Owning a rental property (or ten)
Direct ownership is one of mine Favorite ways to invest in real estate. Don't get me wrong, there are still many risks and potential headaches in owning your own property. But I've found the returns are worth it, and a lot of people are surprised that if you play your cards right, cash flow can increase very passive.
This method requires some preliminary work. Due diligence can really make or break this type of investment. Unlike other types of property investing, the review and research is 100% yours. However, as long as you have a system that works for you, it is nowhere near as bad as it sounds.
A common objection to owning a rental property concerns ongoing maintenance. Nobody wants to get the call “My toilet is broken” at 3am – and for good reason.
Fortunately, even though I own several properties myself, I have never received such a call. Good property management takes care of all everyday matters and all I have to do is approve the occasional email decision and cash the monthly checks.
The world of syndication is complex, but essentially syndication is the pooling of capital to invest in a real estate opportunity (similar to crowdfunding). As a rule, they are only open to accredited investors.
Syndication is facilitated by a “sponsor” who reviews a real estate deal, acquires funds from investors, and then buys, manages and operates the property. As an investor, you simply collect the payouts.
Note: If you want to learn more about syndication, be sure to read this post.
This changes things just a little since you are investing just as much in the sponsor as you are in a property. Therefore, due diligence should be carried out on both.
This investment method also offers many different types of business, from single family homes to industrial businesses. This enables excellent diversification.
Once you've found a trustworthy sponsor and solid business, syndication can provide fantastic cash flow and is completely passive.
The great thing about real estate investing as a sideline is that there are so many options to choose from. Regardless of your availability of time or capital, there is an option for you.
The downside is that all of these options make it a bit difficult to choose one. Personally, I recommend starting with something small, like crowdfunding. That way you can find out if it's right for you and how much you really care.
The key is to get started as soon as possible. Once you've embarked on the real estate investment route, you probably wonder why you haven't done this sooner.