Passive Income for First Time Real Estate Investors

The Pros & The Pitfalls

Owning a single-family dwelling or a multi-family housing such as residential condos, is a good way for new investors to get their feet wet in the residential real estate investment market. Assimilating yourself into this network and understanding the intricacies behind your real estate investment options is a must, if want to succeed.

While endeavoring into this housing machine, you should be aware of the pitfalls as much as you are aware of the benefits associated with your financial undertaking. In this article we are going to walk you through some of the most notable benefits and downfalls of your investment decisions.

Some of the topics we will be covering for you are:

  • Is real estate investing right for you?
  • Why it is in your best interest to invest in real estate passive income?
  • How can passive income from real estate investments help you provide your family a secure life?
  • What are the most notable downfalls of residential real estate investments?
  • How can you overcome the pitfalls of residential property investments?

Is real estate investing right for you?

If you think it is light work to own and manage a real estate investment property, think again. Owning real estate investment properties is tough and lots of dedication will be required depending on how you choose to manage your time and your investment. You should never look at real estate investments as an investment, you should look at investing in property as a business. A business that you will need to manage and maintain, a business that you will need to care for just like any other business you'd startup.

Property management requires record keeping and constant care for the home. This will provide your tenants with their basic necessities; some of these are:

  • Rental payments and expenses
  • Managing property repairs
  • Upgrades and renovations, among others

You can manage all of this by yourself, which some new investors do, or you can do what the smart worker does and outsource the maintenance & collections to a property management firm that is experienced in this field.

Why is it in your best interest to invest in real estate for passive income?

There are notable benefits of investing in real estate for passive income purposes. One of course is the passive income, monthly rental income that is derived from your real estate investments. If the overall collective debt of your properties is low to non-existent, you will have a sizable cash flow from your rental income to raise your family. This is every small real estate investor's first goal. With passive income comes freedom of time that you can spend with your loved ones.

How can passive income from real estate investments help you provide your family a secure life?

As your family grows, so does your investments. Property investment benefits are much more than just passive income, the benefits extend all the way to the Federal level. Below we have outlined some additional advantages of investing in residential properties.

  • Tax Deductible: The interest on the money you borrowed to invest in your property and expenses associated with your property are tax deductible.
  • Equity: As the value of your investments increase, so does your equity and your net worth.
  • Leverage: You can leverage your investments for more lucrative investments in the future.
  • Savings: If saving is hard for you to accomplish, paying off your property can be your enforced method of saving money for the future. Who knows, maybe you can even use it for a reverse mortgage down the line.

What are some of the most notable downfalls of residential real estate investments?

As with every investment decision you make, you should be well informed prior to making those decisions. Below we have outlined some of the pitfalls of investing in single-family dwellings. Don't be afraid of these, just be better prepared for them.

  • Unsustainable Cashflow: Properties with large debt have more difficulty bringing in cash flow, a simple way to fix this problem is a proper down payment for an investment purchase.
  • Lack of growth: While there is only 1 tenant to generate income from, there are many parts of the property that carry a high cost like the roof. Proper property insurance can mitigate some of these high costs.
  • Possible Excess Risk: Due to recourse debt, an investor could potentially risk more than 100% losses in a single-family dwelling. This is a very important issue, it could be a make it or brake it scenario.
  • Asset Management: You can manage the property yourself or you can hire a property management firm that will report to you and collect on your behalf.

Overcoming the pitfalls of residential real estate investments

One of the many ways you can overcome these pitfalls is to diversify your investment portfolio. Just like any other investment opportunity, you too should diversify your real estate investments from residential units to commercial real estate investments.

At first, getting into this market will be tough, but if you're partnered with a group that has the experience, it can be a great starting point for you to get your feet on the ground and in the commercial real estate investment market. Maybe you want to have ownership in a corner shopping mall, maybe high-rise buildings, or you can contact a team like Kashmiri Realty who can search for available opportunities in commercial real estate investing with well established groups.

We hope these points were very helpful to you and that you were able to gain not just an understanding but a list of additional questions we can answer for you by calling us at 904-553-2409 or emailing us at

Go Back