For both new and experienced investors, it’s critical to understand how to create new opportunities for investments and find financing for those investments to build long-term wealth. If you want to take your real estate investment business to the next level, you must deepen your knowledge of passive income investments and creative financing.

Building Passive Income with Creative Financing

For real estate investing, bank financing can’t be your only method of finding funding for new investments. In recent years, bank financing options have grown even more limited. In fact, banks limit the number of properties financed by each investor. Also, loans for real estate investors have stricter requirements in general. Today, banks deny around 80% of real estate investing mortgage applications.

So, how do you take your business to the next level? You must shift your thinking as an investor. Start thinking like the rich! This means instead of focusing on how much a deal will cost you, shift to think about how much you will make on the deal.

When you shift your thinking, your point of view changes from problem-focused to solution-focused. Real estate prices have almost doubled over the last 20 years. There is money to make in real estate investing and you want to find those routes into new real estate investment opportunities.

Finding passive income through long-term investment strategies builds wealth and takes your business to that next level!

Wholesaling Versus Buy and Hold

In general, there are two main real estate investing strategies: wholesaling and buy and hold. Both strategies work for new or seasoned investors. Wholesaling offers short-term wealth with quick payment. Buy and hold creates long-term wealth through passive income.

With wholesaling you can tap into quick cash while learning the real estate business. Wholesale deals work when you sign a contract to buy a property with a seller but then transfer the contract to a different buyer. You receive a fee for connecting the seller to the new buyer. However, you never take ownership of the property. These deals are a great way to enhance your income. In fact, you may view these as your personal ATM.

Buy and hold, on the other hand, provides continuous cash flow through recurring passive income. These investments also offer considerable tax advantages. Buy and hold deals are a win-win. The tenants pay down your liability for the property while you gain equity and net worth. In addition, you receive monthly income.

Both types of strategies offer advantages for investors. Smart investors mix strategies to build a diverse real estate investment portfolio with both short-term and long-term investments. This creates a variety of income and wealth producing opportunities. However, buy and hold deals are the key to next level wealth through passive income.

Three Types of Real Estate Investing Passive Income

Passive income takes a real estate investing business from quick profits to long-term wealth creation. Passive income derives from rental properties, partnerships or other income sources where you receive regular income without active involvement. In other words, you receive payment without much additional effort each month. This is a way to scale your business because you make ongoing money with little management effort.

1. Rental or Option Income

Rental income is the most common type of passive income for real estate investors. With rental properties, the investor owns the property and rents it out to a tenant. The tenant pays monthly rents. In addition, the property usually increases in value for the investor.

2. Generating Notes

Generating notes is a clever investment strategy to create “notes” or “paper” on real estate property that the investor does not own. For example, the investor may place a second mortgage on a property flipped on the wholesale market. The investor receives payments from the borrower resulting in passive income.

3. Joint Venture Partnerships

Investors create joint venture partnerships when they bring in “money partners” as investors. These partners pay for their participation in the deal. As an investor, the passive income is the money provided by the partnership.

Diverse Investment Strategies Build Next Level Businesses

To take your business to the next level, combine investment strategies. However, ensure you create a foundation of passive income. Use wholesaling and buy and hold strategies together throughout your career to obtain both short-term and long-term income.

Understand that for every possible deal there is a potential positive outcome. For example, each investment property offers the option to sell at wholesale, flip or hold for passive income. Don’t be scared to try new strategies or take risks. Mastering knowledge of various investment strategies, specifically the three passive income strategies above, creates a definite advantage for the investor.

Motivated investors usually find a positive outcome. This motivation is your biggest asset in taking your real estate investment business to the next level.

Article Source: https://www.biggerpockets.com/