How is "passive income" typically generated through real estate?

Passive income in real estate primarily comes from generating revenue through rental income and the appreciation in property value over time. When investors purchase properties and rent them out, they receive consistent cash flow in the form of rent payments, which constitutes passive income. Additionally, as the real estate market grows and the properties increase in value, owners can benefit from capital appreciation, further contributing to their overall passive income.

Investing in real estate generally allows investors to earn income without the need to be actively involved in daily operations, unlike direct management of rental properties, which can require significant time and effort. Therefore, rental income and property appreciation define the essence of passive income generation within the real estate sector.