How to Invest in Real Estate for Passive Income
Learn how to invest in real estate for passive income to become financially free, and here’s the perfect strategy to get you started even if you don’t have a lot of money.
Is real estate a good way to make passive income? Absolutely! I’m about to demonstrate one of the keys to financial security.
I’m Ted Thomas, and today I’m answering your question about how to invest in real estate for passive income. Hundreds of my clients have followed the process that you are about to learn.
Before I finish, you’ll see you can have financial security making small deals and big money with the best passive income investments in real estate.
Want to learn how to make big profits in real estate? Would you like to buy mortgage-free homes for pennies on the dollar? Or earn double-digit interest rates secured by real estate? Learn how with this FREE mini class!
Using a Contract of Sale to Sell Investment Real Estate
This works so well that one of my former students was able to purchase 60 tax defaulted properties using the system that you are about to learn.
He sold those properties with low down payment techniques using what we call a contract of sale, and he accepted installment payments. In less than 6 years, he purchased over 60 properties.
As we go through this lesson, I want you to think about the passive income that he was able to generate because he learned this step-by-step process.
Keep in mind, I can’t teach you everything I know in a short article. This information could fill many hours of a workshop or an all-day seminar. For our purposes, I’ll keep it simple and to the point so that you’ll get it.
How to Invest in Real Estate for Passive Income With This Versatile Process
So, let’s introduce you to how to invest in real estate for passive income.
In the past 30 years, I’ve narrowcast what type of real estate I prefer. For the record, that is tax liens and tax deeds. I’ll tell you and show you why, but first I want you to understand what I’m revealing today can be used in many ways other than real estate.
Small business owners who want to sell and retire need steady income, so they use the same method and process that you are hearing about and learning about today.
Using Installment Plans to Sell Real Estate Property
Americans love installment sales because they can own what they want now for a small down payment and pay the balance over time in installments.
A perfect example is buying a boat, or I’m sure you’ve seen those big campers on the highway the size of a Greyhound bus with a lot of fancy amenities.
Most of those are purchased with small down payments and installment plans.
Earn Passive Income From Installment Payments
As you are about to see, sellers like payments because of the passive income the payments create. Sellers make money on the sale price, and they also make money on the installment sale.
In fact, many installment sales generate more passive income than the profit from the price of property.
I’d like to get into a few simple concepts, and I’ll do that by showing you real world examples of how small investors are making passive income in real estate the way I teach my student investors.
Discover How to Invest in Real Estate for Passive Income
Thirty years ago, I discovered tax defaulted property auctions. I was amazed and delighted because I had practiced different areas of real estate for three decades.
In those days, I purchased single-family homes which I rented. That business grew to purchasing 50-unit apartments with investors, and that grew to purchasing 300-unit apartments with investors.
Investors love real estate because it gives them cash flow, tax depreciation, and the security they want for the future. However, it takes a while. It’s like a marathon, not like a sprint.
How to Invest in Real Estate for Passive Income With Tax Liens and Tax Deeds
When I researched tax liens and tax deeds, I discovered a different way to make money.
I could buy and have a large profit margin at the time of the purchase, which in my experience makes tax delinquent properties the best real estate investments for passive income.
No waiting for an increase in apartment rents, no waiting for appreciation, and little or no management. My life changed. No more employees, no building to house employees, no traveling into 2 or 3 states, and all done from the spare bedroom of my home or a small office.
Today I’m going to show you how to invest in real estate for passive income and include an example of how advantageous it is to do this with tax defaulted property.
My portfolio and my students’ portfolios are properties purchased at tax defaulted auctions. It could be in New York, Florida, Texas, California, or Seattle. Although the middle of the country seems to offer the best deals.
Making Passive Income From Buying and Selling Tax Defaulted Property
Here’s an example. Student A purchases a single- family home in the state of Michigan at a tax defaulted auction. The tax assessor values the property at $80,000. The previous owner did not pay the annual property taxes.
The tax collector is authorized and mandated by the legislature to levy taxes, collect taxes and confiscate properties if the taxes aren’t paid. In other words, the privilege of ownership granted to everyone is forfeited if you don’t pay property tax.
The Michigan legislature gives power to the treasurer of the local county, and the treasurer will confiscate and then sell the property at a public auction. Anybody can attend.
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Buy Real Estate for a Bargain at a Tax Sale
Here’s the best part. The treasurer of the county does not want the property. After all, the county already owns the parks, roads, schools and administrative offices.
The treasurer, wanting to be rid of the property, will sell for a starting bid of the back taxes and a few fees. The treasurer simultaneously is authorized to wipe out any deed of trust or mortgage loan.
Let me repeat the previous statement. The treasurer is authorized and mandated to sell the tax defaulted property at auction and do so for the back taxes and whatever fees are owed.
My students learn to check out the auctions, cherry pick the good properties, and pass over the junkers. They buy those properties at the cheapest price possible.
Additionally, we teach them they bought low so they should sell low, or if they prefer, sell with installment payments.
Is real estate investment passive income? It can produce passive income streams, but it can also generate massive cash flow. It depends on the method of sale.
Which investment will generate passive income? Real estate sold via installment sales.
Tax lien certificates also generate passive income if you want to read more about tax liens. However, today we’ll be focusing on how to invest in real estate for passive income as monthly installment payments.
How to Invest in Real Estate for Passive Income at Auctions
Here’s the solution to make big money with small investments and receive passive income. Installment sales solve the problem.
My students find hundreds of properties at auctions. They only choose and bid on the properties they want.
The student has one simple objective: buy at the lowest price possible.
Depending upon the economy, they could purchase tax delinquent properties for 10 cents, 20 cents, 30 cents on the dollar.
An Example of How to Invest in Real Estate for Passive Income
Here’s an example of how to invest in real estate for passive income by purchasing tax defaulted property and selling it via a seller financing installment sale:
The tax assessed value of the property is $80,000.
The county tax assessor starts the bidding at $5,000.
Keep in mind, the student wants to purchase at the lowest possible price, 10 cents, 20 cents or 30 cents on the dollar. So, for this example, I’ll use 10 cents on the dollar.
Advertising Investment Property For Sale
These are somewhat used and abused properties. My students advertise them for sale on Craigslist, Facebook Marketplace, and other electronic sites like eBay, Zillow, and Trulia.
The advertisement asks for a low down payment, installment sale, and in many cases, it reads, “contract for deed available.” Many buyers are attracted to this advertisement.
People who are good people and have bad problems, like sickness, divorce, or bankruptcy are looking for low down payments and installment sales.
The majority of these people have poor FICO scores, poor credit. Of course, they need a good job and a history of making payments.
How to Invest in Real Estate for Passive Income and Have a Competitive Advantage
Now let’s look at the numbers on this sale, and you’ll see why my students have a competitive advantage.
Tax assessed value is $80,000.
Purchase price of the tax defaulted property at auction was $8,000.
The student investor sells to the new buyer for $50,000.
The student requires a down payment of $5,000
That makes the balance $45,000
Payments of $650 a month for 10 years are accepted by the buyer. ($650 x 12 = $7,800 annual payment)
You see where I’m going with this. 10 years at $7,800 a year will total $78,000 plus the down payment of $5,000.
Generating Passive Income
The buyer is more than happy to receive a price at purchase of $30,000 less than market, and they only paid $5,000 down.
The competitive advantage for the seller was selling below market and providing owner financing.
The passive income of $650 a month generates $78,000 plus the down payment.
So let’s take a look at the passive real estate investing returns on this example.
The student only invested $8,000, so after collecting a down payment and 5 monthly payments, the student has more than 100% ROI and then 9 years and 7 months of $650 a month in passive income!
Conclusion
We hope you enjoyed Ted’s lesson, “How to Invest in Real Estate for Passive Income”
30-years ago, Ted Thomas discovered a step-by-step process that’s low risk and yields lucrative profits quickly, and it begins with investing in a little-known sector of the real estate market, though it can be used in other markets.
What Ted discovered is a hidden gem of the real estate world called tax defaulted property investing. At county auctions across the USA, tax delinquent properties are sold with the bidding starting around the amount of the unpaid property taxes.
When you think about how low property taxes are when compared to a property’s assessed value, you can see the profit margin potential. You can purchase real estate for 10, 20 or 30 cents on the dollar at a tax defaulted auction.
This is how to invest in real estate for passive income and begin generating profits quickly using Ted’s system.
When you buy a property at a low price, you can also sell it for a price that’s significantly under market value, which attracts bargain hunters. Then you can sell it outright for fast cash flow, or you can offer an installment sale to generate passive income.
Offering to finance the property with a small down payment and monthly installments will attract even more buyers because there are many people who don’t have the credit score to qualify for a home loan from a bank despite earning enough income to afford a house payment.
Also, by offering financing, you can increase your profit on the sale because now you can profit from both the selling price and the financing.
Imagine purchasing a property with an assessed value of $80,000 for only $8,000 at a tax defaulted auction, then offering it for $50,000 with a down payment of $5,000 and monthly payments of $650 for 10 years.
In less than half a year, you’d have already recouped the funds you invested, and you’d be receiving a passive income for over 9 and half years.
Now imagine repeating this process again and again. You’d become financially free!
If you’d like to learn more about how to profit from tax delinquent real estate, there’s no one more qualified to teach you than Ted Thomas, America’s leading authority on tax lien certificates and tax defaulted property investing.
Ted Thomas is the only one who provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops & web classes, and personal one-on-one coaching.
Get started today at no cost with Ted’s FREE Master Class, that reveals the incredible opportunities available in tax defaulted real estate. The class is only about 1 hour of streaming video and contains life-changing information! You can’t afford to miss it!
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