Passive income is really an investor's dream. It allows you to sit back and earn money without having to go out and plug away at a job. And investing in real estate could be your ticket to earning $1,000 or more of passive income each month -- potentially for the rest of your life. Here are two different options for generating passive income worth looking at.

1. Invest in an income property

Rental income can be a steady, reliable source of passive income -- especially if you market your income property as a long-term rental instead of a short-term rental. Of course, to secure that ongoing income, you'll need to do a few things.

A person at a laptop.

Image source: Getty Images.

First, you'll need to buy a property in the right market -- one that isn't already loaded with rentals. It also pays to buy an income property in an area that's seen a nice amount of job and wage growth in recent years.

Another tried-and-true strategy within the context of income properties is to buy a home in a place where there's a perpetual need for rentals -- think college towns where professors and students alike will always need housing.

Secondly, you'll need to be strategic in how you price your rental. That means doing a lot of research to make sure you're not settling, but also, to make sure the rent you're asking is competitive.

Now if you're thinking there's no way managing an income property counts as passive income, well, you're right. But you also don't have to manage that property yourself. You could outsource it to a property manager instead, leaving you to sit back and reap the financial rewards.

2. Invest in REITs

REITs, or real estate investment trusts, are companies that operate portfolios of different properties. What makes REITs such a great source of passive income is that they're required to pay 90% of their taxable income to shareholders as dividends. Therefore, you'll often find that REITs pay higher dividends than most stocks.

REITs commonly pay dividends on a quarterly basis, and that's income you can look forward to. But the best way to make the most of those dividend payments is to reinvest them.

Now as is the case with buying income properties, it takes the right strategy to do well with REITs. You may want to focus on booming sectors that have seen a nice amount of growth in recent years. These include industrial REITs and data center REITs.

You might also choose to load up on REITs that own properties that are likely to continue generating income even during periods of economic decline. Healthcare REITs fit that bill, because even during recessions, people need nursing facilities and hospital care.

What's the right strategy for you?

Investing in real estate could make you rich to the tune of $1,000 or more in passive income every month. And if you're not sure whether it pays to buy income properties versus REITs, don't choose. Rather, invest in both. That way, you can diversify within the realm of real estate and set yourself up for even more wealth and success.