In January 2018, I missed my chance of raising the rent on my new incoming tenants because it didn't come to mind until very late in the interview process. I didn't write about my previous tenant's sudden decision to move out in December 2017 after 1.5 years, because they provided a relatively seamless transition by introducing their longtime friends to replace them. I didn't miss a month of rent and didn't have to do any marketing, so I felt I'd just keep the rent the same.
It’s a (mostly) short term, higher risk, higher reward place to invest cash that has a low correlation with the stock market, but is far more passive than buying and managing properties, has more opportunity for diversification than private placements (minimums of 5-10K, rather than 100K), and most of the equity offerings (and all of the debt offerings) provide monthly or quarterly incomes. Unlike a REIT, you can choose exactly which projects you wish to invest in.
I think that rental real estate is not perfectly passive income. Landlords need to make a lot not only in order to list the property, but also to keep reliable tenants. So, I would say that it could a challenging job, for people, who have rental real estate but not a source of passive income. Maintenance and management costs that should to be also considered.
Absolutely Federico. I still invest in real estate but no longer carry the misconceptions that it’s passive income. Fortunately, I’ve held my real estate properties long enough that they cash flow even after paying for management but it was a lot of work in the beginning. Real estate is a great investment but passive income investors should look to REITs and other investments rather than direct investment.
One of his favorite tools is Personal Capital, which enables him to manage his finances in just 15-minutes each month. If you sign up and link up an investment account with $1,000+ within 40 days, you get a $20 Amazon gift card. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.
I’m not a software developer, and my early software projects (Blackberry Apps) failed because after paying a developer to build the product, I didn’t anticipate needing to update it regularly or provide support for it. For years after that, however, I had a partner who helped me upgrade our software once a year, and provided support if there are any issues (pretty rare). In 2013, we released our third module for Magento (they range from $49–149), and then ended up building a pretty successful SaaS product for Shopify. I left the business to my partner, and it still pays him over $3K a month in completely passive income. He updates the software every few months and answers the occasional customer email. Not bad!
What's crazy is that my book income is more than my SF condo-rental income. Yet I didn't have to come up with $1.2 million of capital (the minimum cost to buy my condo today) to create my book. All I needed to create my book was energy, effort, and creativity. I truly believe that developing your own online product is one of the best ways to make money.
That’s a nice read! I love your many tangible ways mentioned to make passive income unlike certain people trying to recruit others by mentioning network marketing and trying to get them to join up and sell products like Amway, Avon, Mary Kay, Cutco or 5Linx. People get sucked into wealth and profits and become influenced joiners from the use pressure tactics.
Money from dividends, for example, are taxed at a lower rate than money from a job. A business owner who works in the company she or he founded would have to pay more self-employment payroll taxes compared to someone who merely had a passive interest in the same limited liability company who would pay only income taxes. In other words, the same income earned actively would be taxed at a higher rate than if it were earned passively.
2. Focus on income-producing assets. Internet growth stocks may be sexy, but they provide no income. To build a large enough passive-income stream to survive, you must invest in dividend-generating stocks, certificates of deposit, municipal bonds, government Treasury bonds, corporate bonds, and real estate. You're free to invest in non-income-producing assets for capital appreciation too. You just want to earn reliable income when the day comes to leave your job.
Betterment – Betterment was the first robo-advisor to launch, almost ten years ago. They’ve automated the entire investing process, so all you have to do is watch your portfolio of assets grow (over the long run, of course). They do charge a .25% annual fee of your account total, so if you’ve got $100,000 that’s being managed by Betterment, you’ll pay just over $20 per month.
Of course, you can make honst money in Internet info-products, or affiliate marketing, or other such areas where people tend to get drawn to "passive income" fantasies. But, to make real money over the sustainable long-haul, you must treat these like any other business. In other words, you must provide real value to real customers with a real need.
You are valuable. Your time, your work, knowledge, experience, and output are all valuable. In fact, your employer (or your customers, if you’re an entrepreneur), probably pay a lot of money to rent these things from you. The problem is, whether you’re a doctor, a lawyer, an artist, an engineer, or even a baker, the value you create is consumed once — then it’s gone. You can only sell a loaf of bread once. You can only sell each open heart surgery to one client. The value trades hands, and now it belongs to the customer — you get paid once.
CD Interest Income: I only have one CD account left in the amount of $185,000 paying 3%. It expires at the end of 2018 and I’ll have to figure out what to do with it. After selling my SF rental house in mid-2017 for 30X annual rent, I’m left with about $500,000 in cash after investing ~$2,200,000. The best CD today is the CIT Bank 12-month CD at 2.5%. That’s pretty darn good because just a couple years ago, such a CD was less than 0.5%. The yield curve is flattening, meaning folks should take advantage of shorter duration CDs.
Non-fiction e-books that educate your potential audience on specific topics like finance, online marketing, and business are going to make you more money than fiction books. Of course, there are always exceptions and you could write the next Harry Potter book, but if you want to create some residual income opportunities quickly, I would suggest you go for what sells first!
Skillshare is more of a social learning platform where you can teach real-world skills. The range of skills that you can teach is only limited by your imagination - from board game strategies, garment construction, cooking tutorials, travel hacking, and relationship tips. I even saw a course on how to build a grown man's wardrobe. Creating a class on Skillshare is free. For each student who enrolls, Skillshare takes a 30% fee (Similar to Udemy). You are also provided a unique teacher referral link that lowers the fee to 15% for students who enroll via your referral. Note that all online courses on Skillshare go through an approval process based on specific criteria.
Also, if you pursue an income stream like affiliate marketing, your blog can be a source of content that allows you to link to affiliate sites in a way that is seamless and natural. For example, if you are an affiliate marketer for a company that sells productivity tools, you can blog about your own struggles to stay on top of your to do list. Then, you can mention how much those tools have helped you.
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Publishing a book isn’t just a way to create a new stream of income. It’s also a powerful way to build your authority and credibility. Imagine all the educational content you have created through your blog posts, presentations, articles and videos combined with the know-how that you have yet to share. Those insights can be used to create a powerful book (or more!) to attract customers and earn some extra money.
Like many, I was first really turned on to the idea of passive income by Tim Ferriss. In The Four Hour Work Week, he describes the system he developed with BrainQuicken, where the marketing, shipping, reordering, banking, and even customer service of the company was on complete auto-pilot. I found this idea intoxicating. The idea that Tim could travel the world learning to tango and staying on private islands while money just accumulated in his bank account seemed like some strange fiction — surely, this isn’t how people actually live, is it?
However, I think for those who are willing to do what it takes, the sky is the absolute limit. As an example, I’m trying to take a page out of FinancialSamauri’s book and create an online personal finance and investing blog. It is an enormous undertaking, and as a new blogger, there is a seemingly endless amount of work to be done. That said, I hope that one day I can not only generate some passive income from the hours of work I have put and will put into the project, but I hope to be able to help OTHERS reach their financial goals.