5 Ways To Earn Passive Income Through Real Estate

Updated: January 26, 2021

Can you earn money without working? Yes, you can. That’s called passive income.

Building massive wealth and achieving financial freedom often requires creating multiple sources of passive income for yourself.

Fortunately, there are many ways to create passive income. And perhaps, the most popular method is through real estate.

However, most people only know one way, and that’s through rental properties. But, we’re going to tell you about four more strategies today.

The real estate sector and the financial markets have changed over the years. That’s why Filipinos can now earn and invest in real estate through ways that were not possible 20, 10, or even 5 years ago.

So, how can you earn passive income through real estate today? Here’s a quick list.

1. Rental Properties

Of course, this has to be the first on the list. This strategy is simple and straightforward. That is, to buy a property and then have it leased or rented out.

For instance, Vista Residences has ready-for-occupancy condo projects in Manila and Quezon City that you can invest in and eventually rent out to earn passive income.

However, do note that this method is also the most expensive. You’ll need a lot of capital, and good credit history if you’re purchasing real estate through a loan.

One strategy that you can do to make this more affordable is to consider getting foreclosed properties.

2. REITs

The second method is to invest in REITs or Real Estate Investment Trusts.

I already wrote about investing in REITs, and you can read that blog article here.

As of writing, there are two REITs scheduled for an IPO this 2020. The first one is Ayala Land’s AREIT this July, and then Double Dragon’s DDMPS in October.

REITs provide passive income like high dividend-yield stocks. You’ll receive regular dividends from the rental income of the properties inside the REIT.

3. Real Estate ETF

If more real estate companies created REITs in the country, then you’d need a lot of money if you want to invest in all of them.

However, another option is to invest in real estate exchange-traded funds (ETF). You’ll receive competitive dividend returns while diversifying your holdings across multiple commercial real estate properties.

So, rather than having to buy individual shares of one REIT, when you invest in a real estate ETF, a professional fund manager determines which REITs to invest in and uses investors’ money to buy baskets or groups of REITs.

At present, the Philippines doesn’t have Real Estate ETFs yet. But that may change when we have more REITs.

For now, you can invest in real estate ETFs in the global market through eToro. The US New York Stock Exchange has Vanguard Real Estate ETF (Code: VNQ) and iShares Core US REIT ETF (Code: USRT), among others.

Create a FREE eToro account with 0% commission for stock investing here.

4. Real Estate Crowdfunding

Another way that you can earn passive income through real estate is to participate in crowdfunding projects.

This works by creating an account inside a crowdfunding platform, and once verified as an investor, you can now passively participate in funding a real estate property as one of several investors pooling their funds together.

Returns and risks vary, but the most popular and most trusted platform in the country today is Flint Philippines. They regularly offer 12% per annum dividend rates on real estate projects with only a minimum of P1,000 investment.

You can sign up for a FREE account on Flint Philippines here.

5. Real Estate Corporate Bonds

The last method to earn passive income through real estate in the Philippines is to invest in corporate bonds of real estate companies.

Long-term commercial papers allow you to earn a fixed interest rate regularly over several years, creating passive income for you.

Moreover, bonds offer a good hedge against the stock market as they are often inversely correlated in performance.

Unfortunately, real estate bond investments are not always available. You’ll need to watch out for announcements in the news to be able to invest in them.

Learn how to invest in bonds here.

Final Thoughts

It’s important to have passive sources of income because we can’t work all our lives. When retirement comes, our passive income will provide for our daily expenses.

Real estate remains the most popular source because it’s perhaps the most convenient and easiest to set up, compared to starting a business or creating royalty income.

Lastly, all five methods mentioned above are good and profitable. There’s no “best” option among them because the right real estate investment choice for you depends on your own financial goals.

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  1. A very good read sir Fitz.

    When I think of how to earn via Real Estate, I always resort to rental income, which is very expensive to set up.

    With this timely article and AREIT’s IPO, I will give #2 a shot.


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