You get the starting point behind rental housing: you buy an investment property and then collect the rent on it.
Many skeptics wonder how passive rental income is?, as landlords still have to advertise empty units, screen rental applications, sign rental agreements, and collect rent. Good thing SparkRental’s landlord software can do all those things for you (shameless plug!).
Landlords can also rent out their properties as short-term rentals rather than to long-term tenants.
Rental housing provides income forever. You can increase rents over time, making real estate a good product hedge against inflation.
They also usually appreciate in value and come with dozens deduction of real estate rent, including paper costs such as depreciation.
While a large deposit helps, you can find ways to: buy a rental property without depositing money.
If you don’t want the headaches associated with owning real estate directly, you can still invest in real estate. In fact, some real estate crowdfunding platforms you can invest with as little as $10.
Crowdfunded REITs work in a similar way to publicly traded REITs in that they represent pooled funds that own various residential and commercial real estate, or sometimes debt secured against real estate. But instead of buying and selling shares directly on exchanges, you buy shares directly from the crowdfunding platform. That eliminates stock market volatility, but also makes stocks hard to sell. Most crowdfunding platforms expect you to leave your money invested for at least five years.
Checking out fundraising as a renowned platform for residential and apartment buildings, and Streitwise for commercial properties.
Crowdfunded Loans Secured by Real Estate
You can also invest money in real estate backed loans.
My favorite of these is Ground floor, a hard lender that provides short-term loans. These are purchase-rehabilitation loans for real estate investors, usually for 6-18 months. After the borrower is done renovating the property, they sell it as a flip or refinance it using the BRRRR strategy.
Crowdfunded real estate loans offer another option for: passive income streams from real estate.
Personally, I don’t like bonds, given the constant low interest rates over the past decades. But they have their place in retirement planning, for older adults with little risk tolerance.
Still, consider finding ways to replace bonds with real estate in your investment portfolio.
Yes, businesses require a huge upfront investment to start and grow. I should know, as the founder of SparkRental – it was exhausting!
But at some point, founders can start delegating the management and growth of their business. They can hire managers to take over most day-to-day business operations.
Consider online businesses and digital products for their low overhead and quick setup. You can explore information products such as online courses (check out our free course investing in rental properties as an example). Or you can flip store products or make money by referring people to affiliate partners. Or whatever other business model you want.
Know that when you go in, you are working twice as hard as employees, at least for several years at the beginning.
Alternative Types of Passive Income
You can get as creative as you want exploring passive income ideas.
Different types of passive income can be: advertising on your car, or installing vending machines or washing machines. It could mean creating art or stock photos or music and earning royalties from it.
Do some research on the good old interwebs for more passive income types and ideas!
Think differently about time and money
With active income you get immediate satisfaction: you immediately earn money, in exchange for work.
This is how most of us think about money. Our parents raised us like this:
“If you do more chores, you make more money.”
And then our first five jobs reinforced this message:
“If you pick up the Saturday shift, you make more money.”
We talk about this extensively in how parents can raise their children to be good entrepreneurs, rather than good employees. It starts with teaching your kids to think differently about money.
But with passive income, you need to invest money, time, or both before you start seeing results. Passive Income Required: Lake work then active income… initial.
See all the time that went into it for the money to come in?
Yeah… that’s just not what most people are about.
That graph above is nothing like the traditional relationship between time and money. Passive income is about breaking that “time = money” mentality and thinking like this:
“If I spend the next 60 days scouting potential rental investments, making offers, arranging a property, and placing a good long-term tenant in my new rental home, I will make $400/month for the rest of my life. income .”
Time, money and effort upfront, followed by quitting work but continuing to earn money.