Passive income is a word that has been abused over the years and has become something it’s not. True passive income is earning money without investing time, it’s hiring capital to work for you 24 hours per day 7 days per week without rest. True passive income is difficult to generate because most investments require some maintenance and a watchful eye. Passive income is the greatest source of wealth a retiree can have and living off of the income stream can help you protect your nest egg.

While it’s true that CD’s, stock dividends, bonds, notes, and other investment vehicles can produce income without you lifting a finger –they only produce a modest income, and dividends aren’t guaranteed. And while you can make more money from appreciation of equities over real estate in the short term, the volatility of the stock market keeps many investors at bay.

Real estate can be the most powerful source of passive income because of rental income, but not every real estate investment is passive, and you need to know the difference. The difference between passive investing and active investing is that one requires time and energy and one doesn’t. Most real estate investments are active, even some investments where a management company is involved can be active–if it takes your time.

“True passive income is earning money without investing time, it’s hiring capital to work for you 24 hours per day 7 days per week without rest.”

Ten years ago, I found myself wanting to earn passive income after reading books like “multiple streams of income,” and “rich dad poor dad.” I thought the best way to do that would be to get into real estate and have a rental property. I purchased a condo and ended up finding what I thought was a solid renter. And although our renter didn’t cause us many problems- we lived close enough that he would sometimes walk over to our house or give us an occasional call about miscellaneous items or fixes that he needed us to attend to. When we made the investment, we didn’t exactly picture our renter stopping by our house making requests, it really threw us off.

When that renter moved out we ended up finding 4 college students to rent to this time but we hired a management company to manage everything. Instead of managing the property ourselves the management company collected the rent, fixed repairs, and hired the tenants. At this point in time we lived in another Country and literally couldn’t be there to manage the property always, the only problem is that even after using the management company we still had to spend time and energy dealing with the different issues. We were having discussions with the management company on a weekly basis about how to deal with different problems with the tenants and it was stressing us out. This was beginning to feel like anything but passive income investment, it was becoming a part time job.

What I learned was Individual real estate deals aren’t really passive income opportunities if you are involved with the process, even if it’s to a small degree. If it requires you to spend energy solving problems and issues than it’s not truly passive. I have a friend that has 144k units of condos and apartments and also owns the management company that’s responsible for the maintenance of all the properties. While this might sound pretty good, the reality is that he just took on a job managing his passive income, which now makes it very active.

If you really want passive income through real estate take note of a few things. First, it’s important that you find a means to invest in a property that is managed by a sponsor that manages everything else. In other words, have a manager of managers looking after the property for you. When there are a few layers of management you won’t hear about the rental issues and you won’t’ have to expend energy dealing with issues, you just deposit the check that is sent to you. These types of passive income investments can be public REIT’s, real estate related ETF’s, home building stock, and crowdfunding platforms. While the former options are good, it’s the latter that is going to generate a better return. One of the benefits of a crowdfunding platform is you don’t have to leverage yourself in any one property, you can pick out several different real estate investments giving you passive income opportunities as well as diversification.

And while you can tap into passive income from different sources, real estate has always been the best choice for true passive income. A fascinating study from “The rate of return on everything” states that:

“The ideal investor would like to hold an internationally diversified portfolio of real estate holdings, even more so than equities.” The Rate of Return on Everything, 1870–2015

Fractional real estate investing through blockchain technology provides the best of both worlds, you get the liquidity and diversification of an equity investment combined with access to diversified international passive investments around the world. Blockchain security tokens represent legal ownership of fractional real estate and are a unique way of digitizing assets on the blockchain– providing 24-hour access to global investors that hold cryptocurrency.

Blockchain technology through RealtyReturns.io has made this a reality. Through ERC-20 smart contracts on the Ethereum platform you can buy and sale real estate tokens through the exchange, creating more liquidity than ever before. Because the cryptocurrency market is in the hundreds of billions of dollars an exchange provides an easy accessible place to buy and sale with cryptocurrency. You can now reap the benefits of passive income through real estate ownership and have the liquidity of the stock market.

Democratizing global access to investment grade commercial real estate using the blockchain. Visit RealtyReturns.io and join our Telegram group https://t.me/realtyreturnsglobal

Trevor Whiting

VP, Investor Relations

RealtyReturns

Experienced Sales Leader of over 14 years and has started offices in London, Toronto, and the US. He was VP of Investor Relations of RealtyMogul where was responsible for revenue growth, sales operations, and growth initiatives. Under his leadership, he developed a sales playbook that resulted in 2x growth.