Wednesday , 23 May 2018
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5 Reasons that Passive Real Estate Investing Works

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People have been looking for ways to invest their money in a way that earns generous returns for centuries. This is nothing new at all. In fact, real estate investing has been around for longer than most financial institutions, as the early days saw people bartering for properties and services. We have come a long way since those days, but the basic premise remains the same. Individuals want to see a return on their investment, and the less work they have to do to see that return the better. While it is never a good idea to just invest your money and walk away, it is helpful to pump your money into a project that generates a constant revenue stream for you without you having to actually be physically involved. This form of passive investing has made its way into the real estate sector in recent years, and the opportunities today are almost limitless.

The Growing Popularity of Crowdfunding

Passive investing with real estate has become more popular with the development of various crowdfunding platforms. While only a few such platforms existed in the United States a mere decade ago, and even fewer abroad, that number has mushroomed to over 70 today. This growth has enabled small and large investors alike to get involved today in scales never before dreamed possible. No longer does an individual investor needs to raise funds all on their own and be responsible for the entire process of owning a property, complete with the property management that it entails. Today, investors can choose to be silent watchers in the entire process, earning their return while other managers do the work for them. If properly executed, everyone can win, and the market can continue to expand. Let us examine a few of the specific reasons that passive real estate investing works in today’s economic climate.

Many of the Taxes Are Taken Out of the Equation

When participating in an investment that is structured as an equity, such as that described in the Fundrise Reviews, the process of passive investing in the real estate market makes it possible for you to earn cash returns that are tax deferred. In the short run, this enables you to keep more of the profits generated from such investment activity in your pocket, which can then be used to passively invest in even more projects found on real estate crowdfunding platforms. Investing passively, such as what takes place on real estate crowdfunding platforms like Fundrise, enables you to offset your income with your share of the depreciation expense exhibited by the project itself. This is made possible due in part to the pass-through benefit that is built into the concept of real estate ownership, no matter if you are the sole owner, or passively involved by just owning one share in the funds that were raised to complete the project.

By taking taxes out of the equation, investors are able to generate more revenue much quicker than with other types of investments, enabling the revenue to be put back to good use. This is unlike traditional forms of interest payment, such as stock dividends or bond yields. Take advantage of the new opportunities available to everyday investors by getting in on the ground floor of a real estate project that interests you.