Achieving financial freedom is often considered a pipe dream. Although many Americans have savings, they don't have additional revenue streams that can supplement their monthly income and loosen up their finances. Around 20% of American households receive passive income through rental properties, dividends, or interest.
Investing in real estate isn't always about flipping homes. Owning additional properties could become a passive income source that can cover unexpected, large bills. As a real estate investor, you will reap the financial benefits and change your lifestyle for the better.
Do you want to learn how to make passive income from rental properties? Here's what you need to know to get started.
Rental Income
The first way to make passive income from rental properties is by receiving money from tenants. The majority of landlords can make between $15,000 and $50,000 each year. The size, location, and current market value will affect how much passive income your property will generate.
Take Advantage of Tax Write-Offs
Rental properties come with lots of expenses including maintenance fees, utility bills, and property management. Working with an experienced property management company can help take the stress out of owning a rental property. They can also help you advertise the property and assist with finding responsible tenants.
You may be happy to hear that you can take advantage of tax write-offs to protect the profits you make from your rental property. Residential properties depreciate over time, which means you can claim this as an expense on your tax return.
Smart Financing
The typical down payment for a rental property is 15% of the purchase price. While paying for a property outright is preferable, it is not always an option for prospective investors. There are various options for financing a rental property including:
- Conventional mortgage (bank loan)
- Hard money loans
- Existing home equity
- Private loans
Speak to different lenders to find out which option is best for your circumstances. Consider the future costs of each finance option and how it will affect your long-term investment before you sign anything.
Selling the Property
Although selling your investment isn't the best way to create passive income, it is still a source of income. If your property is worth much more than what you paid for it, then you stand to make significant capital gains. This is the last resort option if you are not making enough passive income from the other options.
Generate Passive Income Today
Making passive income from your rental properties doesn't have to be stressful or time-consuming. There are many ways to enjoy the financial benefits of a long-term real estate investment If you don't want to be a landlord. Whether your property is managed or not, you'll soon begin to enjoy the financial freedom that rental properties can provide.
Are you interested in investing in real estate in South Carolina? Get in touch with Sumter Property Management to schedule a consultation and discuss your property needs.
