In economically uncertain times, the Brazilian investor tends to diversify his portfolio to include real estate. And, when buying a property, it is possible to rent it - the most common form of passive income, a type of income that will be explained throughout this blog post!
Download the ebook: To invest or to live: how to choose the right apartment for both occasions?
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WHAT IS PASSIVE INCOME?
Passive income, as the name implies, is that regular income that requires little or no active effort on the part of the recipient. It can be divided into two categories:
- Passive income with capital: after investing money in some investment, you start to receive a return
- Passive income without capital: happens after the execution of some previous work that will pay off later (for example: payment for copyrights, licenses for use or advertisements on the internet or payment of pensions)
The passive income with capital, which is what this article is about, comes mainly from the rental of real estate or from passive participation in some profitable company.
It is basically seen as income from a single job, which continues to yield without the need to actively seek profitability.
It is easier to understand when contrasting it with active income, like our salary: you work every day for that money and, if you stop working, you will stop receiving it.
In the case of renting an apartment, for example, you can pay the down payment (about 20%), start renting it (which helps to finance the real estate financing, if applicable) and, once paid, will yield passive income whenever it is rented.
AND WHAT ABOUT PASSIVE INVESTMENT MANAGEMENT?
Passive investment management follows the same logic: one chooses to follow a known profitability, not the active search to overcome it. It is similar to investments in fixed income (learn more here), but without this absolute guarantee, then it requires a little market research.
In passive management, an investor seeks an asset related to a reference index (between 1% and 7%, in any example) and that seems to him that he will maintain a performance similar to that index. That is, there will be no surprises when that asset yields between 1% and 7% - you can leave the amount there, quietly.
DIFFERENCES BETWEEN ACTIVE INCOME AND PASSIVE INCOME
To obtain active income, you must be constantly working and striving for it.
In the case of investments, for example, it is necessary to be buying and selling shares (which are an example of variable income ), studying market fluctuations and making decisions according to new scenarios to maintain or grow profitability.
The passive income is more predictable and does not require this effort. You acquire an asset by already knowing or, at least, realistically estimating what its profitability will be and under what circumstances.
HOW TO GENERATE PASSIVE INCOME?
It is possible to generate passive income (a regular income that comes from little or no effort) in several ways, mainly through:
- Investments in the real estate market (using property for rent through rent)
- P2P loans ( peer-to-peer or person to person)
- Share dividends
When you buy a property and put it on the market for rent, monthly rent becomes a form of passive income - just wait for it to fall into your account.
In the same way P2P works: you lend a sum of money to another person, through a specialized platform and, when it is time to get the money back with interest, you just wait for payment.
In the case of stock dividends, it is important to note that not every company pays dividends in this way. Those that pay, however, distribute part of the profit to shareholders periodically and proportionately - and then just wait for the money to arrive and decide whether to withdraw or buy new shares.
Also read: Why has the housing market reacted so well to the pandemic?
WAYS TO INVEST IN THE REAL ESTATE MARKET
To generate passive income in the real estate market, you can:
- Purchasing a property and renting it
- Invest in real estate funds that pay monthly
The most common way to have passive income is to buy a property and rent it out. Even with rental prices fluctuating, the truth is that people always need a place to live!
And nowadays, with the most affordable real estate credit in the history of Brazil, buying a property through real estate financing has become an attractive business opportunity for investors.
There are also real estate funds, the so-called FIIs, which also distribute income periodically and passively to their quota holders.
There are FIIs of the most diverse types, such as those that invest in shopping malls, business buildings, condominiums, hotels, warehouses and so on. Each with its own market opportunity - and managed by other people, so you don't have to keep an eye out every day.
Download the ebook: To invest or to live: how to choose the right apartment for both occasions?
DISCOVER LOFT'S PORTFOLIO OF APARTMENTS FOR SALE!
Loft offers an ever growing portfolio of apartments for sale in São Paulo and Rio de Janeiro, as well as a series of services to facilitate the purchase and sale of real estate.
Among them are legal assistance and free assistance with real estate financing to achieve the best conditions for each profile - making the purchase of property safer, faster and more affordable for those who want to generate passive income in this way!
In addition, it is possible to complete the entire process online, through innovations such as visits via videoconference and digital bookkeeping.
