Real Estate Investing For Passive Income: Gulf Coast

by JadeDragon

One of the most time tested ways to make passive income is through investing in real estate. From the dawn of private property ownership, renting property to others for use as a home, place of business or a farm has been a very good way to generate consistent income that does not involve trading time for dollars.

The US mortgage crisis and resulting fall out in the real estate market represents one of the largest transfers of wealth from weak hands to stronger or more enterprising hands in American history.  Some parts of the country represent better opportunities than others though.

Under normal real estate market conditions market forces (buyers, sellers and renters) push real estate prices high enough that it is cheaper on a cash out of pocket basis to rent than to buy.  Whenever it becomes cheaper to buy than rent the renters move in to the market and start buying homes, forcing the prices up.  Investors interested in single unit housing end up subsidizing their property mortgage and holding costs, at least for the first few years. Kind of the opposite of passive income as you have to not only put cash down, but feed the property additional cash every month.

In the current real estate market, areas such as the Gulf Coast of Alabama actually have single family homes you can buy and get positive cashflow.  Taking a look at gulf coast real estate on the beach shows deals like this:

Photo of 23044 Perdido Beach Blvd ,Unit 338, Orange Beach, AL 36561 (MLS # 185686)
27070 Perdido Beach Blvd ,Unit 40, Orange Beach
2 beds, 2 full baths
Home size: 900 sq ft
Year built: 1985
Photo of 260 Beach Blvd ,Unit 12A, Gulf Shores, AL 36542 (MLS # 183386)
260 Beach Blvd ,Unit 12A, Gulf Shores
1 bed, 1 full bath
Home size: 550 sq ft
Year built: 1996
Photo of 24825 Perdido Beach Blvd ,Unit 112, Orange Beach, AL 36542 (MLS # 185892)
24825 Perdido Beach Blvd ,Unit 112, Orange Beach
2 beds, 2 full baths
Home size: 809 sq ft
Year built: 1981
These are units that are below replacement cost (cost of construction) . In other words, no one will build competing buildings until the prices come up again.
If you are really into building passive income and doing it mostly online where your physical location does not matter, living on a gulf coast beach would be a pretty good choice, especially considering the low cost of getting a condo to live in. So, for passive real estate income (or a place to live) look at markets where the prices make sense.

Comments on this entry are closed.

Previous post:

Next post: