TJ PorterBy T.J. Porter, WCI Contributor

Real estate is a popular investment for a few reasons. One is that it’s a very finite resource—there’s only so much land on Earth and you can’t really make more. Another is that everyone needs a place to live, so demand is high. What might make it most popular is that you can invest in real estate with significant amounts of leverage. On the other hand, real estate has a major drawback. It can be a lot of work. Finding tenants and maintaining a property takes effort. Still, if you know what to look for, you might find a good low-maintenance property that can serve as a source of passive income.

 

Passive Income and Real Estate

It’s important to keep in mind that there are almost no real estate investments that are truly passive. Short of investing in a real estate investment trust (REIT), you’ll have to do some work on your properties if you want to invest in real estate. Even if you hire a management company to do most of the work, you still have to put in the effort to find the right company and make sure they’re holding up their end of the bargain.

The goal here is to find properties that require less hands-on and day-to-day work rather than ones that require no work at all once you’ve invested.

 

Turnkey Properties

If you’re looking for a more passive real estate investment, you shouldn’t consider fixer-uppers or follow strategies like the BRRRR method. You should be looking for high-quality turnkey properties that can start producing a return immediately.

In real estate, turnkey properties are those where you don’t need to do anything to get the property ready for use. Basically, you put the key in the door and turn the key, and you’re done. If you’re buying a turnkey home for yourself, that means you could move in immediately. If you’re buying a turnkey investment property, it should be a property that’s already ready to rent out. It could even have a tenant already, and it comes with a management team already ready to go.

If you want a truly hands-off investment, you can work with a turnkey real estate company. These businesses list properties and help investors purchase them and then serve as a management company, handling the day-to-day of maintaining the property and finding tenants.

That makes investing easy and passive but leaves you reliant on a single company to ensure your investment performs well. 

More information here:

10 Tax Advantages of Real Estate – How Many Can You Name?

 

Types of Low-Maintenance Real Estate

Though working with a turnkey company is an easy way to get started, taking a slightly more active hand in things, looking for opportunities of your own, and choosing your own management company will leave you less reliant on a single point of failure.

If you decide to go this route, these are some different types of low-maintenance real estate.

 

Single-Family Homes

Buying and renting out a single-family home is one of the most common things for real estate investors to do. They’re typically cheaper than multi-family properties, and they have fewer things that can break or fail. There will be some hands-on work required when it comes to maintenance. Your tenants may handle basic things like shoveling snow or mowing the lawn, but if the water heater breaks or a sink springs a leak you’ll need to fix it yourself or call a plumber to do it for you.

For a more passive investment, look for homes that are well-constructed and in great condition. Newer homes will likely need less maintenance—and therefore less effort—from you than older ones.

You’ll also need to be more hands-on when it comes to finding and vetting tenants, but if you can find a good long-term tenant, you can sit back and enjoy a relatively passive investment.

 

Apartment Complexes

It may seem counterintuitive that a large apartment building could be a passive investment, but the reality is that managing an apartment with a dozen or more units is a full-time job and not one you’ll want to handle yourself. If you go this route, you’ll be hiring a management team to take care of the property, find and vet tenants, and handle maintenance. You’ll have to pay for the service, but the rent should cover those expenses.

Keep in mind that, typically, you can’t buy an apartment with a traditional mortgage, so you’ll need to get a commercial loan, which has very different terms.

 

Storage Facilities

Many people rent out storage facilities to store their extra belongings, and historically, they’ve been a relatively recession-proof type of commercial real estate. 

What makes them an appealing investment for those who want to take a hands-off approach is that they face far less wear and tear than residential properties. People only visit when they want to drop something off or pick something up rather than living in the property full-time. However, leases tend to be shorter. There are many potential tenants, but finding long-term tenants is less likely than with residential real estate.

 

Trailer Parks

Trailer parks serve as a place for people to park their mobile homes and trailers. With housing becoming more expensive, demand for mobile homes has increased and many major investors have turned to buying trailer parks in light of that demand.

low maintenance real estate

Trailer parks are very low maintenance because you aren’t responsible for the mobile homes or structures parked on your property. The trailers and mobile homes are owned by your tenants, so they’re responsible for all of the maintenance. You’ll have to pay for and maintain things like utility hookups and any amenities you offer, but that will be far cheaper than paying to maintain something like a single-family home.

 

Other Passive Real Estate Investments

If you’re interested in real estate, there are ways to get exposure to the market without actually going out and buying a property yourself. That can make these investments even more passive than traditional real estate investing.

For example, you could invest in a REIT. These trusts function similarly to a mutual fund, investing in a wide array of properties, letting you build a diversified portfolio easily. There are also real estate crowdfunding sites. These websites let investors pool their funds and invest in larger properties than they could afford on their own—such as large apartments, hotels, or office buildings. The crowdfunding site handles the process of buying the property and managing it, making this a passive option.

More information here:

How Our Portfolio Performed in 2023 (Including Real Estate!)

 

The Bottom Line

Real estate investing is popular for a reason, but it can also be a lot of work. By focusing on the right properties and finding a good property manager, you can make your investments more passive.

 

WCI’s No Hype Real Estate Investing is the best real estate course on the planet and the best way to get started in this exciting (and profitable) asset class. Taught by Dr. Jim Dahle and more than a dozen other experts, this course is packed with more than 25 hours of content, and it gives potential investors the foundation they need. If you’re interested in real estate investing, you can’t afford to miss the No Hype Real Estate Investing course!

 

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