Disclaimer: This article has been submitted by our sponsor, Aloha Capital
In this article, we will delve into the fundamentals of creating passive income through real estate notes (or debt).
- What is passive income?
- What is passive real estate investing?
- What is real estate debt investing?
- Ways to passively invest in real estate debt
Let’s get started.
What is Passive Income?
Passive income refers to money earned with minimal effort or direct involvement after the initial setup. It allows you to generate earnings without actively trading your time for money. Kevin Hill, CEO of Aloha Capital, emphasizes that true passive income does not involve ongoing management or decision-making.
What is Passive Real Estate Investing?
Passive real estate investing involves partnering with trusted experts to handle the day-to-day management of properties, freeing you from direct involvement in tasks like property acquisition and renovation. By choosing the right team, investors can benefit from real estate income without the active effort.
Real estate debt investing, on the other hand, entails providing loans to active real estate investors in return for interest payments secured by the property. This form of investment offers a steady income stream while being backed by property collateral.
Ways to Passively Invest in Real Estate Debt
When considering passive real estate debt investments, it’s crucial to partner with experienced lenders who have a track record of success. To get started, you can explore different paths:
- Real Estate Debt Fund or mREIT: Invest in a diversified portfolio of loans through an entity, providing exposure to various borrowers and projects. Consider the portfolio makeup, fees, and liquidity options.
- Whole Loans: Purchase an entire loan originated by a trusted lender, allowing you to select specific projects that align with your investment goals.
- Partial Loans (Participation): Invest in a portion of a loan, diversifying your investment without the constraints of investment size. Customize a diversified portfolio of partial loan investments.
Interested in real estate debt investing? Aloha Capital offers insights and access to all three paths of passive debt investing through their investment platform – Swell.
