Insula Capital Group

The Underappreciated Benefits of Passive Real Estate Investing

Stocks and bonds are limited to a piece of paper and don’t exactly give returns while they sit there. Why not try passive real estate investing as an investment method that will also generate profits? Investors can make money without giving too much time and attention to it.

Here are some benefits of passive real estate investing everyone needs to know.

Various Streams of Income

Primarily, multiple passive real estate investing leads to multiple streams of income. Many of these investments will target high rates of return. With multiple properties, it results in various streams of income for years to come.

Private Money Financing

Another plus with passive real estate investing is that you won’t have to deal with banks. Because of the economic fluctuations, banks take longer and more documentation to provide loans.

It’s a mind-numbing process with no promise of even getting the loan in the end. Hard money lenders and private money financing now offer quickly approved loans making the real estate investment easy.

No Tenant Headache

Passive real estate investors don’t have to deal with the everyday headache of managing tenants and all their complaints. A broken pipe? Not your responsibility to call the handyman.

Investors can forego the management by handing it to the experts. Hiring a property manager will free up time and keep all the minor problems from ruining your days.

Tax Deductions

With passive real estate purchased as an equity-structured investment, the property gives tax-deferred cash returns. You can have an investment and keep more of your earnings. This is another reason passive real estate investing is so popular.

Interest payments and stocks are taxed in the highest income bracket. But with passive real estate investing, the depreciation expense can offset the investor’s income. Any renovation, maintenance, or operational cost can be written off in the taxes as well.

You can also write off the income collected from the property at a lower rate. Also, if you decide to sell the property, there’s also the capital gains tax, which will be lower than the ordinary investor’s income tax.

Risk Diversification

An experienced investor will always tell you, “Don’t put all your eggs in one basket”. When building an investment portfolio, you should be investing in different assets. Diversifying the portfolio reduces the risk of loss when one investment suffers.

If it’s commercial real estate, there are multiple tenants. The more tenants there are, the more rent will be, and there is less risk if one of them defaults on the payments. More income streams mean less risk.

Tangible Asset is a Stable Asset

Unlike stock dividends, real estate properties are tangible assets. You can sell it, rent it out, or live and work in it yourself. The last is a frequent practice.

Some people even operate their own businesses out of their investment properties. Their active income covers the mortgage, and all the expenses can be written off in taxes.

Ready to Invest in Passive Real Estate?

Insula Capital Group is a leading private investment firm that offers hard money loans for real estate investments. We offer fast and reliable loans with zero hidden charges. Our services include real estate lending, fix and flip loans, hard money construction loans, etc.

Reach out to us to know more about real estate investment financing options.