Ending Soon! Save 33% on All Access

3 Ways to Make Passive Income With Other People's Property It is possible to make money from property you don't own. I do it all the time.

By Samuel Leeds Edited by Amanda Breen

Opinions expressed by Entrepreneur contributors are their own.

As a property investor, people often assume that I only make money from my own properties. Nothing could be further from the truth. Especially if you're just starting out, one of the best ways to make a passive income is with other people's property. Here are three effective ways to do it.

1. Rent to serviced accommodation

One of the best ways to make a passive income with property is with serviced accommodation. Serviced accommodation is where you take an apartment or house and rent it out for short lets. This will often involve using online platforms like AirBnB. Of course, you can do this with property you own, but you can also do it with other people's property.

The way this works is simple. You take on a property for a fixed rent from a landlord, then rent it out on booking websites. The landlord gets a long-term guaranteed rent from you and doesn't need to worry about maintenance of the property, as you take this on. You rent the property out for short stays, which generate more income than a long-term tenant, and keep the difference. Win-win.

This is perfectly legal to do as long as you use the correct contracts. This can't be done under standard tenancy agreements, but you can use a management or a corporate let agreement (with the appropriate modifications).

Related: 5 Habits That Made Me a Millionaire by 25

2. Rent to HMO

This is very similar to the last method, but instead of renting the property out for short lets, you'll be taking a property and renting it out by the room. For this strategy, you'll need to find a landlord that's renting a property out as a single let that you can convert into a House in Multiple Occupation (HMO). Alternatively, find a landlord with an HMO who wants to take a step back from managing the property and is happy for you to take it on for a fixed rent. Make a deal whereby you take on the property for a number of years and pay the landlord a guaranteed rent.

A tip for finding good properties that you can turn into HMOs is to look for properties with multiple reception rooms that can be converted into bedrooms. You can then pay the market rent (or even a little less) to the landlord as a single let and make a profit once it is rented as an HMO.

Again, you'll need to get the permission of the landlord to do all this and will need the correct legal agreements in place.

Related: Cryptocurrency Millionaires Are Diversifying Into Property. You Should Be Too.

3. Deal sourcing

This is a slightly less passive option, but still a great way to move towards income independence. Property investors often lack the time needed to find and negotiate deals. This is why many turn to professional deal sourcers. As a deal sourcer, you'll find sellers that want their property off their hands fast and negotiate a below market-value deal with them. You'll also find rent to HMO and rent to serviced accommodation deals. Once you have these deals, you can sell them to investors for a fee.

If you can find a deal a month that you can sell for a fee of 3,000 pounds or two deals that you can sell for 1,500 pounds each, you may be able to quit your current job (depending on your salary).

There is regulation in this industry, and you'll need to get the correct registrations in place before you can sell to investors directly. However, you can team up with a fully compliant deal sourcer and pass deals on to them even before being registered yourself.

Related: 3 Things to Consider Before Buying an Investment Property

A word of warning

Before doing this, make sure you acquire the correct training. Without the appropriate tools, you won't be able to use these strategies correctly. It's also worth noting that none of these ideas are fully passive, but you can systemize all of them over time.

Samuel Leeds

Founder of Property Investors

Samuel Leeds, founder of Property Investors, has one of the largest UK property schools and has himself done over 300 property deals, including a 20-bedroom castle with over 1,000 years of history. Samuel and his wife, Amanda, also run The Samuel Leeds Foundation.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

TikTok Reportedly Laid Off a 'Large Percentage' of Employees as the App's Fate in the U.S. Remains Unclear

Laid-off TikTok employees were notified Wednesday night through Thursday morning.

Business News

More People Are Exploring Entrepreneurship Because of This Unexpected Reason

More new business applications were filed in 2023 than in any other year so far.

Leadership

8 Subtle Hints that People Don't Respect You — and How to Fix Them

While you have to earn respect, you don't have to deal with disrespect in the meantime.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Four Seasons Orlando Responds to Viral TikTok: 'There's Something Here For All Ages'

The video has amassed over 45.4 million views on TikTok.