Real estate can be a great way to earn passive income. However, there are some drawbacks to buying a rental property. The initial expense can be high when factoring in the down payment, closing costs, and needed repairs. On top of that, the income isn't always passive (you have to do some work to find a tenant and manage the property) or stable (unplanned expenses can turn a property from a money maker to a money pit).

The good news is that there's a much easier (and lower cost) way to start making passive income from real estate. Real estate investment trusts (REITs) allow anyone to benefit from owning income-producing real estate. They're super low-cost (usually less than $100 per share) and extremely passive investments. Three great REITs for beginning investors are Camden Property (CPT -1.00%), Equity Lifestyle (ELS -0.51%), and Invitation Homes (INVH -0.59%).

Apartments across the South

Camden Property is a residential REIT focused on owning apartments. It currently has 172 operating apartment communities with nearly 59,000 units across 15 markets, primarily in the southern half of the country. The company concentrates on markets with above-average population and job-growth rates. Those factors drive demand for housing, keeping occupancy high across its portfolio, enabling the REIT to steadily raise rents.

Shares of Camden Properties currently cost right around $100 apiece. The REIT makes dividend payments of $1.00 per share each quarter ($4 annualized). That gives it a 4% dividend yield at the recent share price. The more money you invest, the higher your passive income stream. For example, a $1,000 investment in Camden would produce $40 of annual dividend income.

Camden typically pays out less than 60% of its rental income to investors in dividends. That enables it to retain cash to fund acquisitions, redevelopment and expansion projects, and new developments. The company currently has five communities with over 1,500 homes under development, including two single-family rental communities. Growing rents along with its investments to enhance and expand its portfolio increase its cash flow. That enables Camden to steadily increase its dividend. It gave investors a 6.4% raise earlier this year.

Going off the beaten path

Equity Lifestyle is a residential REIT focused on owning manufactured-home communities. The company also owns RV resorts, campgrounds, and marinas. It has 450 total properties with over 170,000 sites across 35 states and one Canadian province. Manufactured-home communities are very stable investments because relocating a manufactured home is expensive. Meanwhile, demand for boat slips and RV sites is strong and growing as more people spend more of their disposable income on outdoor experiences.

Shares of Equity Lifestyle currently cost less than $75 apiece. Meanwhile, the REIT pays a $0.4475 per-share quarterly dividend ($1.79 annualized), giving it a 2.5% dividend yield at the recent share price. Every $1,000 invested in Equity Lifestyle would produce about $25 in annual-dividend income at that rate.

The REIT has steadily grown its portfolio by acquiring additional locations and expanding existing properties. For example, it bought a 223-site RV community for $9.5 million in March. The company's growing portfolio and rising income from legacy properties increase its cash flow. That enables Equity Lifestyle to increase its dividend. It has grown its payout at a 21% compound-annual rate since 2006.

Focused on single-family rental homes

Invitation Homes is a residential REIT that owns single-family rental properties. The company owned over 80,000 homes across 16 markets. It focuses on owning rental properties in high-growth markets across the Western U.S. and Sunbelt region. Those areas are benefiting from above-average job growth and home-price appreciation.

Shares of Invitation Homes currently cost around $35 apiece. The REIT pays a $0.28 per-share quarterly dividend ($1.12 annualized), giving it a 3.2% yield at the recent share price.

It has steadily grown its portfolio by acquiring additional homes. It buys them from homeowners, builders, and other investors. Invitation Homes recently acquired a portfolio of nearly 1,900 homes from a single seller in a $645 million deal. The company's growing portfolio and rising rental income drive its cash flow higher. That has enabled Invitation Homes to routinely increase its dividend. It has raised its payout twice this year (by 7.7% in December and 18.2% in February).

The easy way to be a landlord

While buying a rental property can be a good way to make some passive income, REITs are way easier. They're very low-cost and completely passive. Camden Property, Equity Lifestyle, and Invitation Homes are great REITs for those seeking passive income because they pay attractive dividends that they've steadily increased, which seems likely to continue.