How To Make 100k A Year In Passive Income With Real Estate

I had a few false starts with real estate investing, but I got serious about it in 2011. From the beginning, my goal was simple. I wanted my income to give me more options. I’ve always believed in staying diversified, so I still put money into the stock market. I think there’s value in 401(k)s, IRAs, and maybe even Bitcoin. But real estate is where most of my money lives.

Now let’s talk about how to make 100K a year in passive income through real estate. The short version is this. If you already have a million dollars, your path is straightforward. Invest it in properties or projects that consistently deliver a 10% return. If you don’t have that million yet, there’s no way around it. You’ll need to put in the work to build up to that level of passive income.

In this article, I’m going to walk through both paths.

What exactly is passive income?

Passive income is the holy grail. It’s what everyone talks about because we all want time freedom at the end of the day. Time isn’t something we’re getting more of.

Maybe your job pays you a million dollars a year, but if you never have time with your family or space to do what you love, it starts to feel pointless. You don’t get to pick up new hobbies, travel, or just enjoy life. At some point, most of us daydream about generating passive income.

The idea behind this income stream is that you don’t have to do “anything” to earn it. I put anything in quotes because there’s still some level of oversight involved. It’s not completely hands-off. You may have to manage it, but you’re not trading your hours for cash like you do with active income. Instead, your money does the work, and the cash flow shows up without you living the daily grind.

Path 1: Passive real estate investing

Reality is that neither of these paths is easy or simple. Even if you have $1,000,000 and now you’ve got to find opportunities that will give you passive income streams, you still have to be careful about the choices that you make. So here are all the ways that you could passively invest in real estate.

Real estate syndications

Real estate syndications are when you and a group of investors pool your money to buy a real estate project that would be too big for one person to take on alone. It’s a way to get into larger commercial deals without having to buy the entire property yourself.

Ever since the JOBS Act passed in 2012, these opportunities have become a lot more accessible, especially for accredited investors.

There are a lot of moving parts with syndications. You’ll want to know:

The syndicator’s due diligence process.
Their track record.
Projected returns.
How long you have to keep your money in the deal.
Financial incentives for everyone involved.

With the right deal and the right team, syndications can be one of the best passive income strategies. You don’t have to get a loan for the property or manage it. So, your risk is limited to your initial investment, plus you still get tax advantages and the financial upside of an ownership stake.

Best for:

Investors who want passive income and equity without being involved in operations.
People with available capital ($100K or more) who want to diversify into larger commercial deals.
Those who don’t want to qualify for loans or manage property.

Startup capital required:

Minimums usually range from $25,000 to $100,000 per deal.
Must often be an accredited investor, depending on the offering type.

Time involvement:

Very low after initial due diligence.
The syndicator handles management, reporting, financing, and operations.

Typical returns:

6–10% annual cash flow during the hold period.
12–18% total annualized return when factoring in profit from sale or refinance.

Main risks or drawbacks:

Money is locked in for several years with little to no liquidity.
Performance depends entirely on the sponsor and the market.
You don’t control decisions since you’re a passive investor.

Private money lending

Private money lending is when you loan money to an active real estate investor and earn a return on that loan. You’re stepping into the role of the bank. It’s not completely passive because you still need to do some due diligence. You shouldn’t just hand over cash to anyone.

The good news is that there are companies that handle most of the legwork. You put your money in, they use it as capital to lend out, and you collect a return. That could be through debt funds or working with a hard money lender.

I did a small private money lending deal in 2017 with a flipper who needed cash to cover construction on a project. He secured the title of the property under my name, I wrote the check to the contractor, and I earned a 10% return on what I put in.

Overall, it was a good experience, but I didn’t make that much because the project only lasted about three months.

Best for:

Someone with available cash who doesn’t want to own property.
People who prefer passive income over active management.
Investors who know how to evaluate deals or partners.

Startup capital required:

Usually $25,000–$100,000 or more for individual deals.
Lower minimums possible through lending funds or platforms.

Time involvement:

Low after initial due diligence
Some monitoring of payments or project updates

Possible returns:

8–12% annually

Main risks or drawbacks:

The borrower may default, or the project may fail. With a secured loan, you can foreclose to recover funds, but it still takes time and effort.
Your money is tied up until the project finishes.

JV agreements

A joint venture is when you partner with a real estate investor who handles all the day-to-day operations, and your role is to bring the money and secure the loan.

That’s exactly how we approached our first hotel deal. We didn’t have any experience running hotels. No bank wanted to lend to us, and we probably wouldn’t have been approved for a franchise on our own.

So we partnered with someone who already knew the business. We put in the capital, he handled 100% of the operations, and we split the profits 50/50.

Partnerships don’t always go smoothly, but this one did. We earned passive income every month without lifting a finger. On top of that, we became close friends with our partner, and he’s who we’re working with on our hotel fund in Barcelona.

The key to this model is finding the right partner and having solid partnership documents in place.

Best for:

Investors who have capital or can qualify for financing.
People who want ownership and equity but don’t want to manage daily operations.
Those comfortable partnering and sharing control and profits.

Startup capital required:

Usually about 10–30% of the purchase price, plus closing costs and reserves.
Can range from $50,000 to several hundred thousand dollars, depending on the deal size.

Time involvement:

Low to moderate if you are the capital partner.
Higher if you’re the operating partner handling the deal.

Typical returns:

8–20% annualized returns depending on deal performance and profit split.
Equity upside when the property gets refinanced or sold.

Main risks or drawbacks:

Partnership issues if roles, profit splits, or decisions aren’t clearly defined.
Returns depend heavily on the operating partner’s performance.
You have liability on the loan since you’re the one signing for financing.

Real estate crowdfunding

Crowdfunding works a lot like a syndication. Investors pool their money to buy commercial real estate. The main difference is that everything runs through a platform. You don’t have a direct relationship with the syndicator.

The platform acts as the middleman. Your returns get paid through the platform, and that’s also where you’ll see updates on the property’s performance.

When you’re evaluating these types of passive income deals, you need to look at two things. The syndicator behind the project and the platform hosting it. You want to be confident in both. The last thing you want is your money stuck because the platform runs into problems.

Best for:

Investors who want passive exposure to real estate without owning or managing property.
People who don’t have enough capital for syndications or full property ownership.
Those who prefer a low-effort, fully online investing process.

Startup capital required:

Minimums can range from $500 to $25,000, depending on the platform and deal type.

Time involvement:

Very low, just initial research and platform selection.
Ongoing involvement limited to reading periodic updates.

Typical returns:

Debt deals: 6–10% annual returns.
Equity deals: 8–15% annualized returns, including profit at sale.

Main risks or drawbacks:

Lack of direct relationship with the sponsor running the deal.
Limited liquidity since your funds are often locked in for 3–7 years.
Platform risk because if the platform fails or mismanages funds, access to your investment or payouts may be delayed or lost.

Direct ownership with property management

This is the classic approach most people picture when they think of real estate and passive income. You buy a rental property and hire a property manager to handle the day-to-day work. You can do this with long-term rentals, short-term rentals, and a bunch of other strategies.

You earn rental income with limited work, but even with a property manager, I will say that it’s not completely passive.

You’ll still make decisions about maintenance, manage the manager, and handle things like mortgage payments and other expenses. Even so, rental properties are one of the best ways to get started generating passive income.

Best for:

People who want to own real estate directly but don’t want to manage tenants or maintenance.
Investors who want long-term equity growth and cash flow.
Someone comfortable making financial decisions but not doing daily operations.

Startup capital required:

Down payment of 15–25% for residential rentals, plus closing costs and reserves.
For a $300,000 property, this is often $50,000–$80,000 total upfront.

Time involvement:

Low to moderate, depending on the property manager’s effectiveness.
You still approve expenses, review reports, and manage the mortgage and finances.

Typical returns:

$300–$600 per month per single-family rental after expenses.
5–12% annual cash-on-cash return, plus equity growth and tax advantages.

Main risks or drawbacks:

Vacancies, repairs, or poor property managers can reduce cash flow.
You are still responsible for the mortgage, taxes, and major decisions.
Not fully passive investments because they require oversight and financial management.

Real estate investment trusts

To generate income from real estate investment trusts (REITs), you’ll need to find options that have at least a 10% yield. Right now, that includes REITs that hold mortgages and real estate debt in their investment portfolio.

REITs require little or no effort except to vet the investment opportunity and understand their strategy. This is just about as easy as it gets, but because you don’t own any rental properties, you won’t get the same tax benefits as with the other passive income ideas I mentioned earlier.

Best for:

Investors who want passive real estate income without owning or managing property.
People who want liquidity and the ability to buy or sell quickly.
Those starting with small amounts of capital or investing through retirement accounts.

Startup capital required:

As little as the price of one share (often $50 or less) for public REITs.
Private or non-traded REITs may require $1,000 to $25,000 minimums.

Time involvement:

Very low way to create passive income that’s similar to buying and holding dividend stocks.
Only requires monitoring performance and dividends.

Typical returns:

4–10% annual dividend yield, depending on the type of REIT.
Mortgage REITs may offer higher yields but more risk.
No direct tax benefits like depreciation or 1031 exchanges.

Main risks or drawbacks:

Share prices can drop with the stock market, even if the properties perform well.
Dividends get taxed as ordinary income unless held in a tax-advantaged account.
You don’t control the assets or decisions, and you don’t benefit from property-specific tax strategies.

Path 2: Real estate portfolio for passive income

You can generate active income for a period of time until you build up your real estate investment portfolio to the level that can give you 100k a year. Strategies are always changing, but here are the main paths.

Property hacking

You’ve probably heard the term house hacking, but I like calling it property hacking because you don’t have to live in the property to make it work. The idea is simple. You buy a property where you can use one part of it and rent out the rest. The classic setup is buying a duplex or triplex, living in one unit, and renting out the others.

But you can stretch this strategy way beyond residential rentals. Property hacking is really about getting one asset that you already need for your own use to create multiple income streams. Here are a few ways you can do that:

Medical office building: Lease out separate offices or suites to doctors, dentists, or therapists. I know a family therapist who got his start in real estate investing this way.
Hair salon: Own the building and rent each chair or suite to independent stylists.
Small RV park or mobile home park: Rent the pads or lots while owning the land.
Office coworking space: Convert a building into shared workspaces and rent desks or private offices.

Best for:

First-time investors or anyone with limited starting capital.
People willing to live on-site or use part of the property themselves.
Small business owners, medical professionals, or creatives who want to offset their own space costs.

Startup capital required:

As low as 3–5% down with FHA or owner-occupied loans in residential.
Higher down payment (10–25%) for non-owner-occupied or commercial property hacks.

Time involvement:

Moderate involvement passive income sources since you’re still coordinating tenants, maintenance, or property managers.
Can become more passive once systems or you put property management in place.

Typical returns:

Can reduce or eliminate your housing or business expenses.
Cash flow varies widely depending on property type and setup.
Long-term equity growth and tax benefits.

Main risks or drawbacks:

Living next to or in the same building as tenants can be inconvenient.
Requires managing multiple tenants, leases, or shared utilities.
For non-residential hacks, zoning, licensing, and commercial lending rules may apply.

Self-managed rental properties

If you buy rental properties and self-manage, you’ll save on fees and costs that you can roll over into buying more buildings. Over time, you build a portfolio that allows you to outsource management and get closer to passive investing.

Owning rental properties can be a lot of work. But once you stabilize them, it’s a great way to earn rental income.

One thing to keep in mind is that a single-family rental doesn’t throw off a ton of cash every month. Most of our properties brought in around $500 a month after the mortgage, taxes, insurance, and other expenses were covered.

If you do the math, at $6k a year, you’d need about 17 of those to hit $100K in passive income. And of course, every time you find a way to increase revenue per property, that’s one less house you need to buy.

Note that this simple math isn’t the full picture. When you own real estate, there are also tax benefits that boost your overall return.

Best for:

Investors who want to maximize cash flow and are willing to trade time for higher profit.
People who want to learn real estate from the ground up.
Those with properties close to where they live.

Startup capital required:

Usually, a 15–25% down payment, plus closing costs and reserves.
No extra cost for management, but you will pay directly for repairs and maintenance.

Time involvement:

High. Not a way to make passive income since you handle tenant communication, maintenance, rent collection, and legal compliance.
Becomes easier with systems and experience, but never fully passive income.

Typical returns:

$500–$800 per month per single-family rental if well-managed.
8–15% cash-on-cash return, plus appreciation and tax benefits.

Main risks or drawbacks:

Time-intensive and can be stressful without experience or reliable contractors.
Mistakes in tenant screening or legal compliance can lead to evictions or lawsuits.
Harder to scale if you remain the only person managing operations.

Real estate wholesaling

Wholesaling is really a networking and outreach game. You need two things to make it work. Motivated sellers and buyers.

On the buyer side, it’s all about relationships. You connect with real estate agents, investors, and anyone actively buying properties. You build a buyer’s list that you reach out to when you find a deal. Once you know what they’re looking for, it becomes a simple match-making process.

The harder part is finding the deals. That’s where the real hustle is. You might:

Drive around looking for abandoned or distressed properties.
Use software to find leads or do direct outreach.
Reaching out cold, hoping to start a conversation.
Advertise that you buy houses.

There are a lot of ways to find opportunities, but they all require active effort. The upside is you don’t need money to get started. What it really costs is time and consistency.

Best for:

People who don’t have existing capital but want to get into real estate.
Strong networkers and negotiators.
Those willing to market, cold call, or knock on doors to find distressed properties.

Startup capital required:

Very low, often just earnest money deposits, marketing costs, and legal paperwork.
Just a few hundred to a few thousand dollars to start.

Time involvement:

High because it requires finding sellers, negotiating, marketing to buyers, and managing contracts.
Not passive, income stops if you stop working.

Typical returns:

Assignment fees usually range from $1,000 to $5,000 per deal.
Skilled wholesalers can complete 1–5 deals per month, depending on the market and systems.

Main risks or drawbacks:

Income is active, not passive and you only get paid when you close a deal.
Legal and ethical issues if you don’t handle contracts or disclosures correctly.
Requires constant lead generation and a strong buyer network.

Commercial properties:

You can start with single-family rentals and eventually roll those into bigger deals like commercial real estate. One of the best ways to do that is through a 1031 exchange.

When you sell a property that’s gone up in value, you’d normally owe capital gains taxes and have to pay back depreciation. With a 1031 exchange, you can take the full proceeds from the sale and reinvest them into a like-kind or larger property. It keeps all your money working for you and boosts your passive income potential.

That’s exactly what we did. We started with a fourplex, rolled that into a seven-unit property, and then exchanged that into a 28-unit multifamily building, which was our first true commercial deal.

It really is possible to scale up. Just like in the corporate world, you’re building your resume and experience. Every deal gets you one step closer to bigger opportunities.

Best for:

Investors who already own rentals and want to scale income and equity.
People with access to significant capital or 1031 exchange equity.
Those who want higher cash flow and value growth from larger assets.

Startup capital required:

Usually, 20–35% down payment plus reserves and closing costs.
For a $2M property, this often means $400,000–$700,000 upfront investment.
You’ll need experience or a strong partner for financing.

Time involvement:

These are moderate passive income opportunities because they have less day-to-day work than managing many single-family rentals, but more complex upfront due diligence.
Usually, you can hire property management companies to offload support.

Typical returns:

8–15 % annual cash-on-cash return once stabilized.
Significant equity growth when the value increases through income improvements or refinancing.

Main risks or drawbacks:

Larger loans and higher stakes because mistakes cost more.
Vacancies or mismanagement can reduce income quickly.
Harder to qualify for loans without experience, strong financials, or a capable partner.

Gateway Private Equity Group Barcelona Hotel fund

Real estate tax benefits for passive income

One of the beautiful things about real estate is the tax benefits. The gist is that these advantages let you keep more of your passive income, plus they can reduce your active income from your W-2 job.

Note, this only works if you have a share in or ownership of a property. Some of the strategies I mentioned above, like wholesaling or investing in REITs, don’t give you these tax benefits.

Here’s how the Internal Revenue Service encourages you to invest in real estate:

Depreciation and tax-free passive income

Depreciation lets you write off part of a property’s value each year as if it’s wearing down over time. It’s not a real expense coming out of your pocket. It’s just a paper expense the IRS allows.

You still collect your rental income, but for tax purposes, depreciation reduces how much income the property shows on paper. That means you can be earning positive cash flow while reporting a lower taxable income.

Carry paper losses forward

If you can’t use all the paper losses from depreciation in the current year, you can carry them forward. That can offset future passive income or gains when the property sells.

1031 Exchange

When you sell a property, you can defer paying capital gains tax and depreciation recapture with a 1031 exchange. This lets you roll your money into another like-kind property instead of handing a chunk of it over in taxes.

I can’t emphasize enough how powerful this is. The government is basically saying, if you reinvest and keep your capital working, you get to keep building more passive income.

Example real estate tax benefit scenario

Here’s a quick example to help illustrate the idea of how these tax benefits come together. This is just for educational purposes. I’m not a financial advisor or CPA, so make sure you run your own numbers and get professional advice for your situation.

Invest: $100,000 in a $5M real estate syndication
Ownership: 2%
Cash flow: 10% = $10,000 per year
Depreciation: Get about $2,900 in depreciation per year (paper loss)
Property exit: Property sells in year 5 for $7M → investor receives $140,000 ($100K return of capital + $40K gain)
1031 Exchange: Defer all taxes on the gain
Total financial benefit: $190,000

Here’s how it plays out:

Year	Cash Flow	Depreciation (Paper Loss)	Cumulative Cash Flow
1	$10,000	–$2,900	$10,000
2	$10,000	–$2,900	$20,000
3	$10,000	–$2,900	$30,000
4	$10,000	–$2,900	$40,000
5	$10,000	–$2,900	$50,000
Exit (Year 5)	+ $140,000 (capital + gain)	—	$190,000 total capital controlled

How to make $100k a year in real estate?

Now that we’ve covered a few different scenarios, let’s compare each option side by side. We’ll look at how long it takes, how much capital you need, and what that means for your path forward so you can build a roadmap and start today.

How many real estate deals for $100K in passive income?

Here are a few different scenarios:

Strategy	Annual cash flow per deal	Deals needed for $100K i
Single-family rentals	$4,000–$6,000	17–25
Small multifamily (2–4 units)	$8,000–$12,000	9–12
Large multifamily (10+ units)	$15,000–$25,000	4–7
Short-term rentals	$15,000–$30,000	4–7
Real estate syndications	$7,000–$12,000 per $100K invested	$800K–$1.2M invested
Private lending	8–12% annual return	$850K–$1.2M lent out
REITs	4–10% dividend return	$1M–$2.5M invested

These numbers assume stabilized properties and realistic returns, not best-case scenarios.

Real estate passive income timelines by starting capital

For the below, I wanted to provide several options depending on your personal finance situation and how much upfront investment you can make.

Starting with $0–$20K

Here’s a sample action plan:

Year	Action
1–2	Build savings through active income from your W-2 or wholesaling. Learn financing, rehab costs, and how to analyze rentals. Save $20K–$40K to invest.
2–3	Buy first rental using FHA or conventional financing. House hack or buy small multifamily.
4–5	Buy second and third property using BRRRR or equity from the first one.
6–8	Own 5–7 rentals producing $5K–$7K per month combined.
9–12	Exchange into an 8–20 unit property. Passive income reaches $100K per year.

Starting with $50K–$150K

Routes you can take if you have existing money to invest:

Year	Action
1	Buy a small multifamily or short-term rental. Cash flow $1K–$2K per month.
2–3	Reinvest savings or refinanced equity into a second property.
4–5	Grow to 4–5 properties producing around $50K per year net income.
6–7	Use a 1031 exchange to move into a 10–20 unit property.
8	Stabilize. Net income reaches $100K per year.

Starting with $1M or more

If you have this larger upfront investment, it opens more opportunities, but you still need to understand due diligence and how to evaluate opportunities.

Path	Outcome
Real estate syndications	Invest $1M at 8–10% annual return → $80K–$100K per year.
Direct ownership of apartments	Buy a $3.3M property with 30% down. Net income around $100K per year.
Private lending	Lend $1M at 10–12% interest. Earn $100K–$120K per year.

What changes the timeline to make $100k a year in real estate passive income

Just like the stock market or other alternative investments, there’s always market dynamics that can help you get there faster or slower.

Factor	Speeds you up	Slows you down
Market selection	High rent-to-price ratio, landlord-friendly laws	Low yield markets, strict tenant laws
Interest rates	Low rates, easy refinancing	High mortgage costs
Tax strategy	1031 exchange, cost segregation	Selling and paying capital gains
Team	Reliable lender, agent, contractor	Doing everything yourself
Property type	Multifamily, short-term rentals	Single-family only

Final thoughts on real estate passive income ideas

Real estate isn’t a get-rich-quick strategy for generating passive income. It takes work, capital, or both. But it is a realistic path for anyone willing to stick with it and invest the right way.

If you’re an accredited investor looking for passive income in an experience investment, take a look at our Barcelona Hotel Fund.