We hear about passive income all the time. You’ve probably gotten some emails to your spam box about it, in fact. Passive income can change your life, and the best passive income ideas can help you reach true financial freedom. The key is knowing the best places to invest your time, money, and effort for a profitable future.
What Exactly Is Passive Income?
Passive income is any earnings you have from sources you’re not actively involved in day-to-day. Stock investment brings in passive income, for example, though it’s hard to make reliable, steady income this way, and there are serious scams and frauds perpetrated on the stock market every day. Not being actively involved in earning doesn’t mean passive income comes without effort, though.
An author, for example, will put forth tremendous effort to write a best-selling novel. Once the writing is finished and the book is published, income comes in regularly even though the author is no longer actively involved.
Passive income continues to build your bank account even if you stop working, opening up options for travel, retirement, or the freedom to move into the gig economy and work on your own terms.
Three Best Passive Income Ideas You Can Start Today
Real Estate and Rental Properties
Smart real estate investment takes planning and care, but of all the best passive income ideas, this one takes the cake. It’s one of the best ways to ensure income flow without the worry of a day-to-day job. As you build your portfolio of properties, you’ll see exponential gains. The trick is knowing where and what to buy. Here are some tips to consider:
Check Market Trends Before You Buy
It’s possible for a particular real estate market to look hot at the moment, but a check into the history of the area will tell you how things are trending. You want areas where prices have been steadily increasing for years. If the trend is down, it’s likely a bad investment. If the upward trend is too sudden, put in some extra research to see if this is a bubble or something that will last.
Find Out What Tenants Want
Whether you are dealing with commercial tenants or individual families, your success depends on knowing what people are willing to pay for. Commercial tenants will be looking for good business areas that attract plenty of customers and get noticed. Families will be looking for areas with good schools. Both types of tenants like properties that are near public transportation hubs or major highways.
Don’t Buy a Money Pit
It can be tempting to buy rundown properties, particularly foreclosed ones, simply because the price seems irresistible for the location. In most cases, however, these turn into money pits that waste your time and make it difficult to keep up reasonable cash flow. The closer a property is to being ready to rent, the easier it will be to get a good ROI.
Plan Rent Carefully
Before you sign on the dotted line with any property, you have to know approximately what potential renters in that area will be willing to pay for it. If you set your expectations too high, you may end up in a situation where your rent isn’t covering all your expenses. When you know what potential renters are willing to pay, you can figure out exactly what upgrades and maintenance are worth your while to invest in.
Choose a Property Manager Wisely
Your property manager will make a big difference in the success of your rental property. The property manager can handle almost all day-to-day functions on your behalf, including finding tenants, collecting rent, dealing with complaints and repairs, and even evictions. You will have to pay your property manager, but for most investors, it’s worth it not to have the stress of dealing with all these issues.
Because the property manager is so important to your success, choose your manager carefully. Look for a person or company with plenty of experience, excellent references, and a good understanding of the local area. It’s also helpful if they have established relationships with local service people they might need to call in a hurry, like plumbers or arborists.
Invest in a Business
This can be a risky way to build passive income, but it also has the potential for very high returns if you choose your partners wisely. Consider, for example, that not all that long ago no one had ever heard of “Uber.” It was just an idea looking for private investors. Because there’s so much potential to lose out here, though, it’s important to follow a few key tips:
Act With Your Head, Not Your Heart
When your daughter’s boyfriend or your old college buddy comes knocking asking for investment, it’s all too easy to respond with your heart. Some savvy investors will recommend that you never invest where family or friends are concerned. While it might not be necessary to be that strict, tread carefully.
Consider Small Investments
Rather than putting all of your money into one company, consider investing small amounts in many companies. There are even apps that allow you to invest indirectly by buying 5% yield bonds. Small businesses then have access to these bonds and get the investment they need, while your money is safer because it’s spread out.
Get a Second Opinion
If you do decide to make a large investment, be sure to get a second and ideally a third opinion from people whose business acumen you trust. While there have been cases where the most brilliant business minds dismissed an idea that later turned out to be a real winner, there are far more cases where the best business minds knew that an idea was a dead-end before it ever began. We just don’t hear much about those.
Embrace the Digital
The digital world offers many opportunities to make some passive income. You don’t even have to be a coder or website designer to get it done. These methods will require some initial investment, and you shouldn’t expect to make enormous amounts of money off them, but they are legitimate ways to bring in a bit of regular passive income that can supplement other larger revenue streams.
Start a Blog
Starting a blog is one of the cheapest things you can do, and sites like WordPress make it very easy. The best part about starting a blog these days is you don’t even have to write or do anything to keep it up. It’s easy to buy the content that you need as well as the expertise to keep the blog ranking well in search engines. It’ll take a while for people to find your blog, but if they like what you have and you build some trust, you can monetize by selling things or attracting advertisers.
Create an App
If you’ve ever been using an app on your digital device and had an idea for how to make a better one, you might not be the only one who wishes there were an alternative. You don’t even have to be able to code to build an app. All you have to do is hire a programmer to create an app for you. Once you are satisfied with your app, put it in the app store. You can sell advertising if your app is popular enough, charge per download, or make it a subscription feed that brings in regular payments.
Build Your Wealth
These are just a few of the best passive income ideas you can start today and grow your wealth without working yourself to death or falling prey to a Wall Street scam. To learn more, subscribe to The Creating Wealth Show today. Jason Hartman’s podcast covers everything you need to know about real estate investment and how to achieve the financial independence you dream of.