The biggest surprise is real estate being second to last on my Passive Income Ranking List because I’ve written that real estate is my favorite investment class to build wealth. Physical real estate doesn’t stack up well against the other passive income sources due to the lack of liquidity and constant maintenance of tenants and property. The returns can be huge due to rising rental income AND principal over time, much like dividend investing. If you are a “proactive passive income earner” like myself, then real estate is great.
Though it can take a while to build up enough cash to put a 20% down payment on an investment property (the typical lender minimum), they can snowball fairly quickly. The key here is to correctly project income and expenses in order to calculate cash flow (the free cash you can put in your pocket after all associated property expenses have been paid). However you have to be sure to include the cost of a property manager in your calculations unless you want to manage the property yourself. Even with a property manager, you may be required to make large repair decisions every now and then – so while this is not a 100% passive activity, you are not directly trading your time for money like traditional employment.
But first, let’s about talk passive income! What is passive income? There are many different definitions out there, but mine goes something like this: Passive income is all about building online businesses that can work for you, that allow you to generate income, and grow and scale, without a real-time presence. In other words, you don’t trade time for money. You build something up front that can continue to work for you over time.
Why did P2P lending get a liquidity ranking of 6? It is quite possibly the most illiquid investment option you listed. You said you rank liquidity by “difficulty level of withdrawing your money without a massive penalty”, and for Lending Club notes, it’s not only difficult and extremely time consuming to sell all of your notes in their super illiquid market, but you would have to sell your notes at large losses to hope to get others interested in buying your notes. On top of that, it is impossible to withdraw your money any other way other than just waiting for interest/principal to pay off every month until maturity in 3 to 5 years. You can’t just one day tell Lending Club “I want to quit, please give me my money back.” One can even argue that it is less difficult to sell a home (in order to “withdraw” the money invested) than to withdraw all of their money from a P2P loan portfolio because it is very possible to sell a home before 3 to 5 years.
Hi, I’m an 18yr old who is about to enter college with a substantial amount of federal aid and scholarships but it is nowhere near enough to pay for the full amount. I know that I will be in debt but I need to figure out a way to generate multiple sources of income somehow to let money flow within the 4-6 years I will be in college. When I’m done with schooling I don’t want to be suffocating in my debt so much where I won’t be able to do anything in life.
Finally, make sure you can service multiple types of clients. This is the best egg to have. Even for something as simple as a dog walking business, you can service multiple types of clients. For example, you can offer a puppy walking service and an adult walking service. You can have weekends at the park services. You can offer to take the dog to the groomers. Try to meet client’s individual needs.
A lot of people don’t even know about my life insurance business, but it’s a huge part of my success. Like my other big projects, however, I started it to help people. Over the years, I’ve seen so many people who are uninsured or underinsured. For whatever reason, they don’t understand the importance of life insurance. Worse, they don’t understand how affordable it is for the average family.
For those of you who don’t want to come up with a $220,000 downpayment and a $900,000 mortgage to buy the median home in SF or NYC, who don’t want to deal with tenants or remodeling, and who wants to not do any work after the investment is made, check out RealtyShares. They are my favorite real estate crowdsourcing company based in San Francisco. I’ve met senior management multiple times as well as their chief risk officer and various members of their investment committee.
Airbnb is a concept that has only been around for a few years, but it has exploded around the globe. Airbnb allows people to travel all around the world and to stay in accommodations that are a lot less expensive than traditional hotels. They do this by staying with participating Airbnb members who rent out part of their homes to travelers. By participating in Airbnb, you can use your residence to accommodate guests and earn extra money just for renting out space in your home.
My favorite type of semi-passive income was rental property because it was a tangible asset that provided reliable income. As I grew older, my interest in rental property waned because I no longer had the patience and time to deal with maintenance issues and tenants. Online real estate became more attractive, along with tax-free municipal-bond income once rates started to rise.
Thanks for writing this Mr. Samurai. I just got over the student loan hump but I feel pretty good about it at 27 having a graduate degree and being 100% debt free. Now that I’m on the other side it is good for my brain to absorb some of your knowledge regarding passive income investments. I love gleaning wisdom from older folks who have been there and done that. Mentors rock!
If you have a blog or some other property that has visitors, you might profit passively via affiliate advertising. For example, imagine that you write a blog about movies. You might review some books about movies, and then link to them on Amazon so you get a cut of the purchase price when anyone buys books through the links. If you blog about hiking, you might promote some hiking gear you recommend on the blog, again generating passive income if anyone buys any of it.
If you’re considering real estate for your portfolio, let me give you some advice: Don’t jump in without a ton of research. It’s not as easy as they make it look on shows like Flip or Flop. There’s a lot that goes into becoming a successful landlord or flipping houses for a profit. Plus, a lot can go wrong and your mistakes can eat up your profits quickly.
Sam…just read this article and I want to say that this is the best posting on passive income I have ever read…in a blog, article, or book. Thanks for making a difference and being an inspiration as to how it can all be accomplished. One of the great benefits of the internet is that people are willing to share their stories and experiences with each other online. If we had this when I was working professionally (20-40 years ago), it would have saved me from making some rather poor financial decisions that affected my retirement income. In a way, the internet is making up for the loss of financial security in the loss of The Defined Benefit Plan for retirement. Bravo!
Or, there is another theory for your primary salary – generate enough to have a little excess cash flow, but do it at a place that you can work stress free and have time to dabble in other projects. A good friend of mine has this setup – he works 10-5 and makes $50,000 a year. This allows him to easily cover all of his expenses, but the shorter hours and flexibility in his job allows him to pursue his secondary income generating ideas!
Brian had found a huge need for web design in the restaurant and food truck space. After getting tired of working with client after client, he decided to turn his service-based business into a product-based one. He made his services more standardized and productized. He eliminated all his client work and created templates and products to serve that market instead. And it’s been going great for him.
Roosevelt saw the economic Bill of Rights as something that would at least initially be implemented by legislation, but that did not exclude either the Supreme Court's development of constitutional jurisprudence or amendments to the Constitution. Roosevelt's model assumed that federal government would take the lead, but that did not prevent states improving their own legislative or constitutional framework beyond the federal minimum. Much of the groundwork had been laid before and during the New Deal, but left many of the Second Bill of Rights' aspirations incomplete. Internationally, the same economic and social rights were written into the Universal Declaration of Human Rights in 1948.
Create a Course on Udemy – Udemy is an online platform that lets its user take video courses on a wide array of subjects. Instead of being a consumer on Udemy you can instead be a producer, create your own video course, and allow users to purchase it. This is a fantastic option if you are highly knowledgeable in a specific subject matter. This can also be a great way to turn traditional tutoring into a passive income stream!
I guess I just don’t understand why the specific importance of focusing on “dividends” instead of focusing on the total return of your investment, including stock appreciation. I don’t really care if a company decides to issue a dividend or not; presumably, if they don’t issue a dividend, then they’re doing other things to increase the value of the company, which will be reflected in the stock price of the company. As an investor, I can make money by selling a percentage of my holdings or collecting dividends, and I don’t really care how that’s divided up – it’s an artificial distinction.
Higher economic growth brought with it positive trends in poverty reduction in both urban and rural areas. In 2000, 55.3% of Ethiopians lived in extreme poverty; by 2011 this figure was 33.5%. The economic growth rate recently declined to about 8%. The government is implementing the 2nd phase of its Growth and Transformation Plan (GTP II). GTP II, which will run to 2019/20, aims to continue work on physical infrastructure through public investment projects, and to transform Ethiopia into a manufacturing hub. Growth targets are an annual average GDP growth of 11%; in line with manufacturing strategy, it also hopes the industrial sector will grow by an average of 20%, creating jobs.
You've probably read blog posts and articles that recommend a certain brand of backpack or water, so you click on their hyperlinked link. Oftentimes, that person gets paid a commission when you do. If you have a blog, the same can happen for you. It's a win-win-win for everyone involved — you, the product you're recommending, and the person who clicks on the link to get the product. Pat Flynn talks about this at length on his website, Smart Passive Income, where you can learn a whole lot more on the topic, aside from affiliate marketing.
Lending Club (U.S. Residents Only) – I talk about Lending Club in every one of my income reports, because I still believe it’s the best source of passive income, even though it’s not my largest source. You can get started for as little as $25, and over the past 2+ years, my interest rate has been 7% or higher, which I think is very good given the relatively low risk involved. This is even more true given the recent market downturn. You can read about how I select my investments here.
Track Your Wealth For Free: If you do nothing else, at the very least, sign up for Personal Capital’s free financial tools so you can track your net worth, analyze your investment portfolios for excessive fees, and run your financials through their fantastic Retirement Planning Calculator. Those who are on top of their finances build much greater wealth longer term than those who don’t. I’ve used Personal Capital since 2012. It’s the best free financial app out there to manage your money.
The creator of MochaManual.com, The Black Mom’s Guide to Life, became a consultant to companies that wanted to better understand the concerns and preferences of African American mothers. You can also become a paid consultant or speaker once you’ve developed your reputation as an expert. A local speaker’s association can help you find gigs and negotiate a rate for making presentations. You might even consider checking to see whether the local community college is interested in having you teach a course in your subject area.
Domain names cannot be replicated. If one is taken, the only recourse would be to approach the owner to discuss a sale. While there are other variations you could choose, sometimes owning a certain domain (especially if it is attached to your business) can be worth the premium. Often, people will scout out domain names that are still available, buy them, and then sit on them in order to sell them down the road. Depending on who may want the domain down the road, you could sell it for a large markup.
Currently we have a duplex and a condo that we rent out. I manage the properties myself so it does take a little time. The rental properties are mostly passive, but I have to do some work occasionally. Recently, I had a tree trimming company out to trim the maple in the back and remove some dead arborvitaes along the fence. We decided to replace the arborvitaes with potted bamboos to help screen the property. So this past weekend, we split a pot of bamboo and planted some mint in the garden. That one sentence sounded easy, but it took us 3 hours to do. We carted an old pot of bamboo from our balcony and it was a struggle. That thing must have weighed 100 lbs. Anyway, we’re willing to put some work into the duplex because we plan to relocate there at some point. Also, the rental income shows up as negative income in our tax due to depreciation. That’s a nice side benefit to being a landlord.
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