I was reading this article (https://themdpreneur.com/purchase-future-cash-stop-buying-more-stuff/) on HN the other day and it talks about a hypothetical person who buys a condo and rents it out, or a vending machine and has it serviced, and a website that brings in income.<p>I come from a fairly traditional investing background of purchasing equities or ETFs as my primary investments, and am interested in learning what else is out there in a non-traditional sense like the above?<p>What other kind of passive income or cash flow helping investments are out there?
Publish books on Amazon. I've published 4 and make about $3k in profit per month, after paying for ads on amazon.<p>Don't write them yourself, that's a lot of work.<p>Instead, do key word research about what books sell in non-fiction categories (fiction is a whole different ballgame). Look for keywords that 1) auto complete in the amazon search bar, and 2) have less than 4,000 matching books, and 3) have an average Amazon BSR of less than 150k.<p>The above isn't easy, nor is it particularly difficult.<p>Once you've found a good keyword, create an outline on the subject. You'll have to do a bit of research here, but this can be done in a few hours to a few days. The more time you spend here, the better your result will be.<p>Then, hire a ghostwriter to produce a 30k-ish word long book. This will run you around $1000, and produce a book long enough to turn into a 3+ hour audiobook on Audible (audiobooks over 3hrs get significantly better royalties than less than 3 hours).<p>Get a cover made. This will run from $50ish on fiverr to several hundred on 99designs or upwork. Don't cheap out, good covers are important.<p>Publish on amazon. Run ads.<p>There's obviously more too it than this. If interested, look up the Mikkelsen twins or Dane McBeth on youtube.
My advice is this: Think about your unique domain knowledge.<p>Ask yourself:<p>* What do I <i>know</i> that gives me an advantage over the average joe?<p>* What other resources do I <i>have</i> that give me an advantage over the average joe?<p>Generally speaking, if your idea to make money sounds really lame, boring, risky, complicated and/or esoteric to an uneducated layperson - but due to your domain knowledge you know that it's not - you're on the right track. Bonus points if it benefits from obscure, difficult-to-get resources that you already have (for instance, a best friend who owns a niche website you can advertise on, or family connections in the X industry, or you live in a town that has a huge Y industry.)
So, about renting, I bought a single family home for $500k in bay area. It now is worth $1M. Gets me rent before expenses of $40000. So far, I have spent about $5k per year on. Repairs etc. So effectively, I make about $20k after taxes, repairs, mortgage interest etc. Overall, I spent $350k by way of downpayment, mortage interest payment, etc. No major tenant issues.<p>Hence, I would peg my return on investment of 5% if I do not account for increase in price of the house. If I do, it would be around 10% which is what FAANG has been giving me, with much less hassles.<p>Decide for yourselves if this is passive enough for you.
I own a rental property, and I have a property manager who handles the day-to-day operation. The money I've put towards the rental would have performed better if it would have gone towards an index fund instead and would have been lower stress that way, but I like the feeling of having at least some "diversified" assets in real estate.<p>I've also made a couple games in my free time ("Dodge the Wall!" on Steam and "Cup Pong AR" on iOS/Android). Those games have been a great way to make ~tens of dollars.<p>The best way that I've made passive income is just through boring Vanguard index funds/target date funds.
No investments are "fully" passive, but some are more passive than others. For equities, the Dividend Aristocrats (those companies that have paid an increasing dividend for 25 years or more) are pretty close, and also are somewhat lower risk than equities in general (lower beta). The traditional passive income investments are bonds, and with as little as $6000 you could create a bond portfolio of US government debt that pays a monthly coupon (each individual bond is $1000 and pays interest every 6 months, so with 6 you get monthly income until the bonds start to mature). Unfortunately, interest rates are so low right now that you probably won't get the sort of income you are looking for even with the longest duration government bonds.<p>Anything that is not as standardized and well-organized as the stock or bond markets is going to require more work and thus is less passive, or will result in you having to pay others to do the work on your behalf (thus leaving you with less income).
Cheeky-and-also-serious response:<p>Soil, for the food you grow to eat, share, or sell. Much about a green, growing area is passive income for is.<p>Another option is lobbying your elected officials to regulate in the interest of healthier land, water, and air, which will help you and many others.<p>Making something useful and giving it away (or charging a nominal amount for hosting costs, or asking others to help with that to keep the use-barriers low) is an investment in other people that may continue paying dividends long after you’re dead.
Buying real estate for short-term or long-term rentals is buying yourself a second job.<p>If you want something more passive, consider investing in several different real estate syndications. You can find them on CrowdStreet or FundRise although I believe you will get into better deals if you join a local investor group and learn from the experienced members. If there isn't a group near you, I'm enjoying participating in www.506investorgroup.com<p>This style is probably only practical if you already have a net worth of at least $1m. The best book I've found is Investing in Real Estate Private Equity by Sean Cook.<p>I think it is reasonable to expect a diversified portfolio of real estate syndications to return 10-15% annually although it will be bumpy and your money will be locked up for years.
I would point out that renting out a condo is not a passive investment; keeping up with tenants, doing cleaning and maintenance, etc. can be a full-time job (maybe less so for a condo than a house, but still). And as we here probably know, maintaining a website is not necessarily passive either, and I would imagine the same is true of a vending machine. These are projects, and at some point they become businesses; not simply "here's my money, make me more".
I'm in the UK and there are quite a few services now that invest your money into property and infrastructure loans as peer to peer loans. I've invested in quite a few and see ~£50 a month as gains across the total set. I usually either reinvest or I pay out and buy into other investments. I could increase my exposure here but I think I'm at a comfortable level for my risk appetite.<p>For me this is investing in property but without the hassle of long term maintenance. You don't own the property but it's much more hassle free and fairly passive as long as you pick which things you'd like to invest into.<p>Services I've personally invested in and would vouch for:
- <a href="https://www.kuflink.com/" rel="nofollow">https://www.kuflink.com/</a>
- <a href="https://www.loanpad.com/" rel="nofollow">https://www.loanpad.com/</a>
- <a href="https://www.lendingworks.co.uk/" rel="nofollow">https://www.lendingworks.co.uk/</a>
- <a href="https://www.abundanceinvestment.com/" rel="nofollow">https://www.abundanceinvestment.com/</a><p>You might like to try out some peer to peer loan based investments if you're after some fairly passive gains.
IMO "passive income" has been hyped a lot by the pyramid scheme folks. If you have an income, you don't need another source of passive income, you need to save your money and invest it. For me, Bitcoin has been the only investment that I've focused on. It is the most scarce asset and will continue to increase in price simply because of the growing demand and limited supply. Just throw a percentage of your income into bitcoin and leave it alone.
I help manage some rental units for my family and it's definitely not passive income. It's not full time work, but something requires your attention regularly. There are plenty of pitfalls where you can find yourself losing money instead of making a profit. For example, if turning your unit over between tenants ends up being costly and time consuming you will still need to pay taxes and maybe a mortgage in the interim.<p>It's not a bad way to earn an income, but it really requires a lot of capitol to get started and earn enough to be worth it. Once you have enough units to sustain yourself you'll invest a decent amount of time keeping the whole operation going.<p>Edit:<p>Some people are pointing out you can use a property manager as a middle man to keep your involvement to a minimum. This is true but they will cut into your profits, which may or may not work for you depending on your margins. But it might make sense to go this route if you have minimal time or many units to manage.
Start a blog. I spent minimal effort making 5 blog posts a few years ago and it already pays for the cost of the domain through ads. Imagine what revenue 100 blog posts, or 1000 would bring in. <a href="https://www.codingwithricky.com/" rel="nofollow">https://www.codingwithricky.com/</a>
Relationships with people can be considered as an investment. Off late I have noticed that any relationship will start degrading in the absence of communication. It's better to invest some time in people you really value and nurture the relationship over time.
One which I'm curious about is buying software businesses with existing user bases and adding new features, kind of the equivalent of buying a fixer upper, but it uses my unique skills.
(1) Write a book on creating income thru mostly passive investing. Get all your content from this Hacker News thread. Edit names to protect the innocent.<p>(2) PROFIT!!!
Several considerations to what other commenters have already said:<p>* Rental properties, vending machines, etc have poor liquidity. What if you need to get your cash back out in an emergency? This poor liquidity is particularly correlated to poor economic conditions (ie. it takes longer to sell a condo in a bad economy which is also when you might really need cash).<p>* Many non-traditional investments are not actually passive. Even with a property manager, you still have to manage that person. Also, many investments can have quarters with negative cashflow. What might happen to your cashflows in a given period if a tree falls on your rental property breaking the roof and the tenants move out as a result? What if your property manager also quits on you because that situation isn't worth dealing with?<p>* There are a variety of ETFs focused on non-debt income (Eg. high dividend equity funds). Vanguard's trades under the ticker VYM. If you come from a background purchasing equities, these kinds of investments might be more comfortable for you.
Other say how landlord ON USA are not that passive, but maybe do it in other countries? Here in Colombia being landlord is very good, because most use an agency that manage the property (collect the money and do some basic fixes). I probably have called the actual owner 1 or 2 times in a decade for approval for some fixes.
Mine is matrix homeservers maintenance [0], but it's not 100% passive, requires around 1-2 hours per week. Service "just started", so income is quite low for now.<p>[0] <a href="https://etke.cc" rel="nofollow">https://etke.cc</a>
I’ve got a share portfolio that generates a couple bucks a day in short share lending.<p>Literally just tick a box to give broker permission. Nothing is risky free but looked into it and as best as I can tell it’s a pretty good deal. No inconvenience, not much risk etc
I use an automatic saving from my bank-account to a investment-robot that my bank provides that automatically buys shares in different funds, I would say it gives 10-20% back and requires zero effort, took less than an hour to setup
Truly passive income doesn't really exist (and shouldn't exist, outside of perhaps some type of state sponsored basic income). The exception in recent history is ETF's, which provide a relatively high level of reliable growth due to a questionable tax exception and government monetary policy that favors stock market positions over other economic metrics such as wealth inequality. I believe ETF's are bad for the economy, despite how popular they are on HN, but if you are looking for truly passive income, I think that's about as close as you can get.
I see a lot of people talking about rental properties and I don't think there's enough talk in favor of rental properties so here's my shot at it.<p>My philosophy of being a landlord is not to bank on appreciation, but rather find houses where the mortgage is well below what tenants are paying for. How do you find those kinds of houses? You buy dilapidated houses, renovate them and then rent them out. If you don't want to go through that work, there are middlemen called "turnkey providers" that renovate houses and then sell them to investors for a profit.<p>From there, you can decide whether to manage the property yourself (less passive) or hire a property manager (more passive). If you hire a property manager, they do all of the busy work associated with owning a house like finding tenants, collecting rent, evicting tenants. They do not get paid unless there is a tenant on the property so it's in their best interest to find you a good tenant.<p>The thing I like most about rental properties is four fold:
1) Positive cash flow (rent minus all operating costs)
2) Depreciation (in the US, you can depreciate the cost of the house--not land--over 27.5 years which usually makes the cash flow stated above tax free)
3) Principal payments (part of the mortgage the tenant pays goes into the principal of the property--usually around 30% of the first payment goes to principal if you put down 20% and it only goes up from there)
4) Appreciation (the house & land usually appreciates at pace with inflation)<p>Graham Stephan talks about this in his YouTube video: <a href="https://www.youtube.com/watch?v=h8wNUaBgZTk" rel="nofollow">https://www.youtube.com/watch?v=h8wNUaBgZTk</a><p>Also remember, the longer you hold the property, the higher the rent will be while your 30 year loan will stay flat. This makes holding property much more appealing later on but with higher repair bills as well as things start to break.<p>There's a lot of advantages with owning homes IF you do the math correctly. Here's a video of Brandon Turner, the owner of Bigger Pockets, discussing how to analyze rental properties for the math to make sense. <a href="https://www.youtube.com/watch?v=2uogn4qtZ8U" rel="nofollow">https://www.youtube.com/watch?v=2uogn4qtZ8U</a><p>Also, if there's a downturn in the market, usually people that own homes move to rental properties.<p>If you're interested in rental properties, I'd suggest the bigger pockets forums where you can read about everyone doing this type of stuff:
<a href="https://www.biggerpockets.com/forums" rel="nofollow">https://www.biggerpockets.com/forums</a>
I’m doing some eBay arbitrage for about $200 a month profit but I’m just starting.<p>I call it arbitrage as I buy at consumer prices from a store online and sell on eBay for a profit.<p>I profit even when paying listing fees, shipping and PayPal fees.
When i sold my first company i built an online shop (with only a few thousand $ actually). I know thats boring and not really passive, however coming from a tech background and running a SaaS this was the first time i was making money with something i could actually touch.<p>We do packages ~twice a week and the postal worker just takes them with him. And when i have days where i feel like compulsive shopping i just buy inventory and not shit for myself.<p>May is harder in countries where Amazon is strong, however Marketing never really was an issue for us as we sell rather specific niche items.
By passive I'll assume you mean less effort and risk than starting a new business that requires daily attention.<p>The nice things about the property market are:
1. High leverage - to a very high amount when you put down payments greater than 30-50%.
2. Managed or protected by some governments. Gives a more consistent rate of growth in many fast growth cities.
3. Cashflow and appreciation.<p>The details matter and there's obviously skill involved in making it work. At some point like other businesses you will need to hire others to manage the day-to-day if you choose to keep growing.
Here's what we do:<p>- Max out 401k<p>- Automated contribution to Roth (up to max), can also use backdoor traditional conversion strategy here<p>- Automated investment into standard index fund, charles schwab has a robo advisor that will automate all this stuff for you, diversification strategies and keep in line with your goals.<p>- Crypto (10% risk exposure here, or more depending on your comfort levels)<p>- Own a home, have used market opportunity to take advantage of cash out refinance, reinvest into our portfolio, simple upgrades to the home and savings.<p>- Keep debt low or completely gone<p>- Don't buy expensive stuff<p>- Take advantage of community supported agriculture if you want to save on food (some places will give you discounts if you order for the whole year)<p>- For home expenses and major repairs you'll want at the minimum 3% of your loan per year on hand. Try and maximize this so you don't have to dip into credit<p>- Keep a savings around for other emergencies (if your health insurance plan includes HSA you can take advantage of growth opportunity here, where contributions here will grow against index funds if you can find the right product - health equity is one, fidelity also offers accounts). HSA withdrawals are tax free for medical expenses at any time. When you are over 50 you can withdraw from your HSA for any reason at all you just get taxed for non-health expenses at the income bracket (similar to other retirement accounts).<p>- save up for goals and things you want like a family vacation<p>- Minimize your subscription services<p>- Look into wholesale cell phone plans (Ting, Visible, Google Fi) it uses the same networks and generally can save you money on your existing plan.<p>- Build simple SaaS projects that can pull in even 3%-5%/year would be a great goal to go for. It's not income replacing levels, but it's enough. Use that to reinvest where appropriate (back into project, or into other areas of portfolio)<p>The goal is to try and have a portfolio that can beat standard inflation *and* lifestyle inflation.<p>You would think this is a lot of scrimping and saving but our expenses are quite low just using these strategies. One of the largest expenses we have is food and mortgage payments.<p>We are considering looking into rental income at some point when the market is in a little bit better buying opportunity. I have friend in Utah that owns a startup called Rentler that does property management as a service. It works quite well so we may end up using something like that to take care of rental investments in the future.<p>I realize not everyone is at this position in life but it’s basically the same strategy we have used until we could move to the next thing. We started out with minimizing our expenses and putting money away until we could buy a home. Now we have moved onto the standard boring investment strategies that should give a nominal rate of return (not looking for anything massive). After this, as mentioned, rental income might be next.
The rate of return on investments is proportional to the risk and/or effort necessary to make it work. Contracting out the management of things like condos, vending machines, etc. destroy the vast majority of any gross profit. Investing in a large-cap, high-dividend mutual fund (Vanguard, etc.) will generate reasonable returns with 0 effort on your part. Just cash out your dividends rather than re-invest.
Staking cryptocurrency in a very conservative way has produced the following incomes:<p>$4600 - 2017<p>$23,000 - 2018<p>$3700 - 2019<p>$2500 - 2020<p>2021 is shaping up to look like 2018 again but I haven't run the numbers
<i>What I have</i>:<p>1. dividend growth portfolio<p>2. p2p lending<p>3. lifetime affiliate commissions for referrals<p>4. SaS website with paid membership<p><i>What I plan to have in the future</i>:<p>1. crypto lending<p>2. real estate
I've been using Mudrex[0] to rent bots to put my crypto to work. They have been very good and open about everything.
Creators are active in discord server answering questions.<p>[0] <a href="https://mudrex.com/" rel="nofollow">https://mudrex.com/</a>
As another poster already said, being a landlord is not 'passive'- you are essentially buying a part time job with no set off hours. The heat could go out on Christmas Eve, while you're on vacation, etc. It is a highly regulated (especially in blue states) field involving, you know, actual human beings!<p>Anyone advocating for being a landlord as a 'passive' investment vehicle is generally some type of Trump University or 'creative real estate' guru trying to sell you something. By contrast equities average a 9% annual rate of return, and are truly passive
Opportunity abounds in the defi crypto space. Being a liquidity pool provider on a usd stable coin pair yields ~40% apy currently[1].<p>[1]<a href="https://app.beefy.finance/" rel="nofollow">https://app.beefy.finance/</a>
Compound will give you a risk-free 6.3% APY (other than the risk of smart contracts) on USDC (digitized dollars) <a href="https://compound.finance/markets/USDC" rel="nofollow">https://compound.finance/markets/USDC</a>