Real Estate Passive Income: How to Earn Money without Much Effort

Investing in real estate is a popular choice for many people, and it’s a great option to build a passive income stream and design a roadmap to financial freedom. If done right, making passive income from real estate can be a great side hustle that won’t take lots of your time and energy.

Here we’ll talk about three ways to generate real estate passive income. Read on to see which sounds like a good fit for you. 

What Is Real Estate Passive Income?

Passive income from real estate is a strategy to earn money without being actively involved. The actual level of involvement varies based on the type of investment.

Some ways to generate passive income demand more hands-on management, while others are passive. But the idea is that once your real estate investment is established, it can generate revenue independently while you do minimal or no work.

Real Estate Passive Income: What Are Your Options?

There are different options when investing in real estate to get passive income. The one you should choose will depend on your level of experience and the time you can afford to dedicate.

Long-term rental properties

Buying a property and renting it out to a single tenant, a couple, or a family is the most common form of relatively steady passive income you can generate from real estate. The rent will cover the ownership costs and even provide a small monthly income. And if you do everything right, you may see significant capital gains over time.

But being a residential landlord isn’t entirely passive. You’ll need to promote a vacant property, screen tenants, enforce lease agreements, and perform the necessary maintenance and repairs. This type of real estate investment also has its risks. Vacancy and turnovers can reduce your income, and problem tenants who cause damage and disturbances can lead to large losses.

And one of the biggest cons of long-term rental property is less flexibility in raising the rent outlined in the long-term lease agreement. The rent price remains the same throughout the lease and limits the potential cash flow.

Rely on a vacation rental management company

Short-term vacation rentals are an increasingly popular way to generate real estate passive income because they have a much higher ROI than long-term rentals. You buy a vacation home or condo in a popular tourist destination and rent it out to leisure travelers after you perform the rental renovation.

Although short-term rental properties have a high upfront cost and higher operating expenses, they may generate 2-3 times the monthly rent amount compared to long-term rentals. That depends on local market demand and conditions.

In fact, short-term rentals aren’t exactly passive because there’s a lot of work involved in managing bookings, communicating with guests, making your property guests ready, etc. So if you don’t want to do everything yourself, you can delegate that work to a property manager or vacation rental management company and make money doing nothing.

But that comes with high property management costs. Property managers charge commission-based fees or fixed rates that could be a significant portion of your rental income. And what if you don’t like being directly involved and don’t want to hire a vacation rental management company? Use vacation rental software like Hospitable to automate your STR business.

Opt for Hospitable to help you manage your short-term rental

Hospitable offers a comprehensive solution for vacation rental property owners and can help you streamline your business, automating 90% of your routine tasks. In fact, with Hospitable, you can automate every aspect of your STR business that can be automated.

And although it’s not a completely passive income, you get all the money and don’t have to perform repetitive daily tasks manually. You can save time to enjoy it with your family and friends or focus on growing your business.

Let’s briefly review Hospitable’s most important features designed to make the life of STR hosts easier and turn your real estate investment into passive.

Channel manager—you can connect your Airbnb, Booking.com, and Vrbo listings to Hospitable and efficiently manage them all from one platform. Our centralized, synchronized calendar offers a clear overview of your bookings on all channels, so you won’t have to worry about juggling calendars. This way, we’ll protect you from double bookings. 

Automated guest communication—Hospitable can automate your conversations with guests. You can use our time-tested message templates in 29 languages and apply more than 50 short codes to personalize them for each guest.

With Hospitable, you can be sure that your guests always receive the necessary information when needed. You can build automated message flows and set up messaging rules for different triggers so our system can send messages to your guests at certain moments.

Our system can detect guest questions on more than 20 common topics and send responses to them almost instantly. Hospitable also has integration with ChatGPT that can help you quickly create thoughtful answers to unusual questions. Your only job will be to tweak the message before finally hitting Send.

Review management—Hospitable can help you to get more excellent reviews if you set up the host review automation process. Our system will remind your guests to leave a review of their stay and publish yours automatically. You just need to provide review templates and set up the message rules.

Task management—Hospitable will send auto-reminders to your team members via email or text/SMS when a new job is coming up based on booking information. Notifications can also be sent via an iCal feed and in a daily digest, and it’s up to you to choose when, how, and who gets notified about new tasks.

Pricing sync—you won’t have to update your prices manually on all your channels. You can set your prices directly on Hospitable, and our system will push them to all your booking channels applying correct markups. You can also integrate your Hospitable account with leading dynamic pricing tools.

Direct booking websites—with Hospitable, you can get a fully functional website without technical skills and accept direct bookings to maximize your revenue. A direct booking website will help you consistently market your property, develop strong relationships with your guests, generate new leads, and build a brand.

Smart lock integrations—our tool supports different models and brands of smart locks for Airbnb, Vrbo, and other platforms and will help you establish a smooth self-check-in process. Hospitable will automatically create and send unique door codes to guests before check-in. This way, you won’t have to worry about being personally present when your guests arrive or leave and will be able to enjoy the advantages of remote hosting. 

Bottom Line

Earning passive income from real estate is a good way of supplementing your income without actually working for it. Renting your property short-term can potentially be more lucrative than long-term rentals. But eventually, you might find out that the income isn’t so passive, and owning a vacation rental can become a job.

You can hire a property manager to turn your short-term rental into a passive investment, but they charge fees that can be a significant portion of the rental income. A smarter approach is to become a DIY short-term rental host, listing your property on Airbnb and similar OTAs, and opt for automation software to streamline your operations. You can put your entire STR business on autopilot using tools like Hospitable.