Ask HN: What passive income investments exist to supplement your salary?
262 comments
I’ve got a share portfolio that generates a couple bucks a day in short share lending.
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
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
The problem with this though is that you are giving ammunition to those shooting at you. If their gambit succeeds (shorting), the value of your shares diminish. The net effect of doing this might not be entirely visible as a "smaller fish in the pond", but it is there none-the-less.
Yeah aware of that.
Short of a scenario like GME where there is an actual shortage of shares to short it won't move the needle given that available shares generally exceed borrowed shares.
It's a liquid market...so if I don't do this all that happens is the people shorting pay a fraction of a penny more in interest. For someone serious about strategically attacking something as a gambit / strategy that makes zero difference.
You can actually kinda see the effect in your own reports because it's proportional. e.g. If I have 1000 shares and only 200 get lent out then there isn't much short pressure. I've only seen it at 100% a few times and then interest rates soar so compensation for is good.
Ultimately it'll return to the intrinsic value of the company in the long run, so don't particular care about short term shenanigans
Short of a scenario like GME where there is an actual shortage of shares to short it won't move the needle given that available shares generally exceed borrowed shares.
It's a liquid market...so if I don't do this all that happens is the people shorting pay a fraction of a penny more in interest. For someone serious about strategically attacking something as a gambit / strategy that makes zero difference.
You can actually kinda see the effect in your own reports because it's proportional. e.g. If I have 1000 shares and only 200 get lent out then there isn't much short pressure. I've only seen it at 100% a few times and then interest rates soar so compensation for is good.
Ultimately it'll return to the intrinsic value of the company in the long run, so don't particular care about short term shenanigans
Yep like I said, but perhaps did not emphasize enough, your shares alone won't move the needle much, but the collective entirety of retail investors lending out their shares (whether they are paid for it or not) definitely does move the needle. And on top of that, the shorters have more supply to draw on and there is less price pressure on the shorting premium as a result.
>If their gambit succeeds (shorting), the value of your shares diminish.
The causality here seems kinda confusing. People shorting an equity doesn't make it go down automagically. They don't have control over that.
They might be right that the stock will go down, but more likely, the shares are going to be used by someone riding trends of some sort.
If you're a long term investor, you don't care about short term trends. If you're planning on holding the stock for _years_, regardless of the performance over the next few months, then it's a nice way to generate income, and with less risk than doing something like selling Covered Calls on them.
The causality here seems kinda confusing. People shorting an equity doesn't make it go down automagically. They don't have control over that.
They might be right that the stock will go down, but more likely, the shares are going to be used by someone riding trends of some sort.
If you're a long term investor, you don't care about short term trends. If you're planning on holding the stock for _years_, regardless of the performance over the next few months, then it's a nice way to generate income, and with less risk than doing something like selling Covered Calls on them.
The shorter borrows the stock to immediately sell (typically at the “buying” price of the spread). This creates immediate down pressure on the price, which is meant to be balanced by eventual up pressure when they have to buy shares to cover.
If you add up the effect on the price lending all retail stocks has on the market, it won’t be insignificant.
Looking at it the other way, if you can generate “less risk” income off it, you have to be aware that the people borrowing the stocks are earning more than they are parting with.
There is no free lunch on the stock market.
If you add up the effect on the price lending all retail stocks has on the market, it won’t be insignificant.
Looking at it the other way, if you can generate “less risk” income off it, you have to be aware that the people borrowing the stocks are earning more than they are parting with.
There is no free lunch on the stock market.
Not if you are buying for the long term. The shorters need to close their positions eventually so that’s a buy back. The shorters can’t be long term.
That has been the prevailing wisdom, as far as I was aware of it. But as many have recently been made aware, there are sophisticated ways to continue rolling over your shorts while increasing your short position.
I had always assumed they just did that already without permission
Basically all of them will...Interactive Brokers is nice in that they have a clear "we'll give you a 50% cut of actuals on your shares".
Other brokers seem to either keep it or implement a far less transparent process.
Since I'm holding risky shares (and thus higher % interest on borrowings) I definitely that directly linked
Other brokers seem to either keep it or implement a far less transparent process.
Since I'm holding risky shares (and thus higher % interest on borrowings) I definitely that directly linked
Perhaps they do. If they get caught, though, that's big trouble with the regulators.
Its generally one of the forms you sign during application
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".
some businesses take care of that work for 15% on rent
Passive income is usually “dramatically less work than a full time job” — e.g. 5 days effort per month. Even paying someone else to do it means you still need to check up on it (and make sure they’re actually doing the work, and doing it competently)
You can hire a property manager who will take a percent and turn it into almost entirely passive income. This is what I do with my properties, and all I do is approve expenses over a certain level and forward tax docs to my CPA at the beginning of the year.
Do you have any tips on vetting property managers, or an appropriate going rate for such work?
I pay mine 7% of rent - you can definitely find lower rates if you're dealing with large buildings, but I'm at 7 units total and I really like the guy.
In terms of vetting them, first thing is to check licenses - most states require them to either be a licensed real estate broker or working under one.
I prefer to work with someone who matches me in scale/style - my guy is a broker and runs his own PM service. I deal directly with him. I'd be hesitant to use a larger PM company (even if it might be a bit cheaper) at my scale, because I'm small enough that I'll be a very low priority and will have the most junior employees dealing with my properties. That can be an issue, since they're not necessarily going to have the expertise to do the long-term stuff like knowing when to get the roof inspected. When my wife moved out of her last apartment before we got married, the rep from the PM company refused to do a move-out inspection, since there was still furniture inside that could have been hiding things. Had they charged my wife for anything, we would've taken them to small claims since PMs are required by CA law to inform the tenant of their right to a move out inspection and then to perform one and provide written feedback on request. That's what happens when you're dealing with someone in their early 20s who just passed the real estate agent exam (which I have passed... it is not hard) and doesn't know what they're doing.
Also, look for companies that serve your kind of property - dealing with a property that has an HOA is different than one that doesn't. Dealing with a single family home is different than dealing with a condo. Dealing with a whole apartment building is different than dealing with a single apartment.
And lastly, references. You should be able to get a bunch of them from the PM. Try to get tenant references in addition to owner references - if the PM is ignoring or mishandling tenant issues, the owner probably doesn't know.
In terms of vetting them, first thing is to check licenses - most states require them to either be a licensed real estate broker or working under one.
I prefer to work with someone who matches me in scale/style - my guy is a broker and runs his own PM service. I deal directly with him. I'd be hesitant to use a larger PM company (even if it might be a bit cheaper) at my scale, because I'm small enough that I'll be a very low priority and will have the most junior employees dealing with my properties. That can be an issue, since they're not necessarily going to have the expertise to do the long-term stuff like knowing when to get the roof inspected. When my wife moved out of her last apartment before we got married, the rep from the PM company refused to do a move-out inspection, since there was still furniture inside that could have been hiding things. Had they charged my wife for anything, we would've taken them to small claims since PMs are required by CA law to inform the tenant of their right to a move out inspection and then to perform one and provide written feedback on request. That's what happens when you're dealing with someone in their early 20s who just passed the real estate agent exam (which I have passed... it is not hard) and doesn't know what they're doing.
Also, look for companies that serve your kind of property - dealing with a property that has an HOA is different than one that doesn't. Dealing with a single family home is different than dealing with a condo. Dealing with a whole apartment building is different than dealing with a single apartment.
And lastly, references. You should be able to get a bunch of them from the PM. Try to get tenant references in addition to owner references - if the PM is ignoring or mishandling tenant issues, the owner probably doesn't know.
I would disagree. If you own property in a good location, screen your tenants, it's almost no work. I have several properties and spend less than an hour a month on average in total dealing with any issues.
Wait until one of them starts a fire.
Source: My family had a tenant that started a fire.
Source: My family had a tenant that started a fire.
Compound will give you a risk-free 6.3% APY (other than the risk of smart contracts) on USDC (digitized dollars) https://compound.finance/markets/USDC
Nothing is risk-free. There is political risk (it gets outlawed), technological risk (it gets hacked), theft risk (it gets stolen), a comet hits the earth risk etc etc.
Additionally, BlockFi pays 8.6% APY on stablecoins. If you have any BTC, ETH, or LTC, they'll pay interest on those as well. Normally interest is paid in like-kind (e.g. a BTC balance generates BTC interest), but with the Flex option, you could have interest from all balances paid as one token. I chose to have everything paid in GUSD stablecoin, for instance, primarily to make figuring out taxes easier.
BlockFi's interest is a very attractive offer, but the risks you're exposed to aren't very transparent.
What could happen that would impact the exchange rate of this 'Stable coin'? What risks exactly is one taking on for the 8.6% interest?
What could happen that would impact the exchange rate of this 'Stable coin'? What risks exactly is one taking on for the 8.6% interest?
With crypto if it’s on an exchange then you can lose it. Not your keys and all that jazz.
Never worth the risk unless there is a legal insurance provided by the government which there isn’t.
Never worth the risk unless there is a legal insurance provided by the government which there isn’t.
This would have been a good comment if it hadn't said "risk free".
What's the difference between this an Aave?
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.
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.
Are there any good sites that do that... seems like they're filled with sites that are hard to verify if they're legit.
you might want to check MicroAcquire
I was disappointed by that website. You can’t see much without registering and once you have, you still can’t see much about businesses (let alone ask questions) without buying a 300$ membership.
I have been part of feinternational for sometime and saw their prospectuses. In general, if there is an existing user base, then the price factors it in already. You must have a plan and ability to increase the userbase in order to get a return on investment. Otherwise, some competitor may simply attract your customers and you are doomed.
It works very well if you are already the bigger competitor :-)
Agreed. But I was talking from perspective of being a passive business for a single person
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.
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.
Decide for yourselves if this is passive enough for you.
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.
Decide for yourselves if this is passive enough for you.
In hindsight, was it worth it compared to just investing all that money into the S&P500?
I think that's his point; that 5% returns aren't actually that great.
Diversity is useful though. Stocks have crashed in the past, and they will in the future. As has real estate and every other investment. You thus need a backup plan in case your investment fails. I make no attempt to predict WHEN these crashes will happen, or how big they will be.
A single property is not diversification, if anything it further concentrates your money into a single asset.
It is a single investment that is government-subsidized with loan-interest subsidies, that you can live in, that also people tend to have great emotional attachment to an unhealthy extent.
Home loans at least in the United States taken out at usually 5x leverage which would never fly for index funds but is ok for some reason for buying a home, even though you could become unable to pay the mortgage in which case the bank has to spend money foreclosing and selling it.
Home loans at least in the United States taken out at usually 5x leverage which would never fly for index funds but is ok for some reason for buying a home, even though you could become unable to pay the mortgage in which case the bank has to spend money foreclosing and selling it.
That depends on the size of your other investments. If the property is worth $100,000 and your total assets are $1,000,000 with the rest in stocks, that one property is a reasonable level of diversification. If you already have a house worth $500,000 then taking money out of stocks to buy the rental is a bad investment. The above are but two very simplified examples. You need to figure out what is correct for your situation though - there is no one size fits all.
What people tend look at when they consider diversity doesn't work. The standard approach is to look for asset classes with uncorrelated returns. The problem that happens is most asset classes become correlated in a downturn. Look at what happened a year ago. If you had a split between ETFs, REITs and some crypto currency none of those investments would have been doing well.
>The problem that happens is most asset classes become correlated in a downturn.
I tend to think it's not worth it to try to hedge against that unless know you're going to need hard cash for a specific purpose during a recession, like meeting payroll in your own company.
My ide of diversifying is to hedge against industry-specific risks like space launches if Kessler syndrom hits, internal combustion tech if the ICE car ban becomes reality, real estate if the Detroit scenario happens, etc.
I tend to think it's not worth it to try to hedge against that unless know you're going to need hard cash for a specific purpose during a recession, like meeting payroll in your own company.
My ide of diversifying is to hedge against industry-specific risks like space launches if Kessler syndrom hits, internal combustion tech if the ICE car ban becomes reality, real estate if the Detroit scenario happens, etc.
Well, 10% is great, and he's diversified. I don't think it's that cut and dry.
Yep. You are right. One thing that it helped me with is pickup a few managerial skills and have a nice diversion from day to day software stuff.
He stated 5% without accounting for the 100% price appreciation in the actual real estate. So the real rate of return is actually much better!
In hindsight not investing in a FAANG was a huge mistake.
And that can quickly disappear for those who end up with tenants that don't pay and can't be evicted.
That's my fear. But can you tell me in what situations I cannot evict my tenants. (Honest question).
Right now? CA still has an eviction moratorium going. If your tenants stopped paying rent you’d just have to bank roll it until it ends and you evict them.
If he can handle the cash flow, he'll be fine. The government printed enough money to pay him in the end.
COVID?
Most states have eviction moratoriums until 6/30 right now due to the pandemic.
Got it. Thx
Even when you can evict your tenants, it can take a long time, since you have to go to court. Had a friend have a property get absolutely destroyed by tenants that took a while to evict - 10s of thousands of dollars of damages. Of course, you could sue to recover your losses but these sort of tenants are usually an empty bag - you can't collect money they dont have and a small security deposit wont cover much. These situations are uncommon, but hardly unheard of.
https://www.nolo.com/legal-encyclopedia/the-eviction-process...
https://www.nolo.com/legal-encyclopedia/the-eviction-process...
Over the lifespan of owning the building, say a few decades, you can expect:
1. Rare but highly expensive major expenses like a new roof, new heating system, etc. It's like a tail risk- you don't pay for it most years, but when it comes up, it costs a lot.
2. Required renovations- just to stay at your current level of quality. I.e. let's say you rent to normal middle class tenants now. In 10-15 years, you'll need to install a new kitchen, new bathroom, overall maintenance- just to stay at a middle class level. The building is constantly depreciating! So unless you intend to move economically downscale and rent to lower income folks, to stay 'middle class' you'll need to refresh the building every decade or two. No one wants an ancient kitchen, a decrepit bathroom from three presidents ago, etc.
So you have to factor those two major expenses into your total rate of return over the decades. How much is a new roof, a new heating system, that new kitchen, that new bathroom.... You may not see these expenses every year, so you don't feel like they count, but over the decades they will.
Source, am actually familiar with the true rate of return for properties over a long enough time span to judge. A 1-3 year snapshot isn't sufficient!
1. Rare but highly expensive major expenses like a new roof, new heating system, etc. It's like a tail risk- you don't pay for it most years, but when it comes up, it costs a lot.
2. Required renovations- just to stay at your current level of quality. I.e. let's say you rent to normal middle class tenants now. In 10-15 years, you'll need to install a new kitchen, new bathroom, overall maintenance- just to stay at a middle class level. The building is constantly depreciating! So unless you intend to move economically downscale and rent to lower income folks, to stay 'middle class' you'll need to refresh the building every decade or two. No one wants an ancient kitchen, a decrepit bathroom from three presidents ago, etc.
So you have to factor those two major expenses into your total rate of return over the decades. How much is a new roof, a new heating system, that new kitchen, that new bathroom.... You may not see these expenses every year, so you don't feel like they count, but over the decades they will.
Source, am actually familiar with the true rate of return for properties over a long enough time span to judge. A 1-3 year snapshot isn't sufficient!
Thanks. This is great insight and one that is missing from most online discussions. I am really terrified of this situation because it will bring down my ROI. Also, I dont like to deal with contractors and related headaches. We will see how it pans out.
Most folks I know that purchase properties are not in it for cashflow. Breaking even is enough. The goal is to purchase the next one with a downpayment against existing equity. The deck of cards falls apart if the property market corrects significantly but how is that different than everything else happening in this economy.
For one it's an extremely capital intensive operation for most folks. In fact buying a property is usually many times their net worth. Which means now one is not allowed to make mistakes, because losing means not only going to zero, but going underwater many times over what the cashflow can cover.
This argument falls apart once a property is a fraction of someone's net worth, but it's rarely the case.
This argument falls apart once a property is a fraction of someone's net worth, but it's rarely the case.
Source, am actually familiar with the true rate of return for properties over a long enough time span to judge.
And what is it?
And what is it?
> Source, am actually familiar with the true rate of return for properties over a long enough time span to judge.
What is it? 7% 11%? Do you factor in financing leverage when you make the tenant pay the principal to your mortgage (if any)?
What is it? 7% 11%? Do you factor in financing leverage when you make the tenant pay the principal to your mortgage (if any)?
1-4%? At first you are just paying almost 66% or more interest and mostly not the mortgage principal, here is an amortization calendar https://www.bankrate.com/calculators/mortgages/amortization-...
If you want leverage, you can get vastly more leverage for risky stock market trades (I am not advocating for doing that, I just think it's odd when real estate proponents talk about 'leverage' as if it's unique to buying a building)
If you want leverage, you can get vastly more leverage for risky stock market trades (I am not advocating for doing that, I just think it's odd when real estate proponents talk about 'leverage' as if it's unique to buying a building)
What about depreciation and lowering your taxable income?
My tax advisor said that for our income levels, it will not decrease or increase any tax brackets.
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Regardless of income, you can defer depreciation to a future tax year.
If you put only 20% down to buy it, that's 100k. So 20k/year is 20% returns, right?
Over the years, I got cold feet and paid off somenof the principal. Thats why I said overall I spent $350k so far
FWIW, your returns are likely significantly above the 5% mark you're referencing. You haven't factored in the unrealized gain of 500k, which would significantly change your returns. All in all, you've got a cash flow positive real estate asset who's valuation has doubled. Unless you purchased 15 years ago, you're likely looking at returns in the mid twenties.
My advice; learn how to actually put together a DCF model and get some real insight into your returns.
EDIT: I realized that my last statement might come off a bit condescending, but that wasn't my intention. Fundamentally, evaluating Real Estate returns is significantly more complex than other investments, such as holding stocks, ETFs, or Bonds. A Distributed Cash Flow (DCF) model will help you gain some understanding that will likely help you to make better decisions about your existing investment and make a more educated plan for the future (e.g. upcoming maintenance, when to exit at what price). You don't have to build a complex model, but even a simple one can help. There's plenty of resources out there, and you don't need much more than Excel to build one.
Source: formerly employed at a national REIT
My advice; learn how to actually put together a DCF model and get some real insight into your returns.
EDIT: I realized that my last statement might come off a bit condescending, but that wasn't my intention. Fundamentally, evaluating Real Estate returns is significantly more complex than other investments, such as holding stocks, ETFs, or Bonds. A Distributed Cash Flow (DCF) model will help you gain some understanding that will likely help you to make better decisions about your existing investment and make a more educated plan for the future (e.g. upcoming maintenance, when to exit at what price). You don't have to build a complex model, but even a simple one can help. There's plenty of resources out there, and you don't need much more than Excel to build one.
Source: formerly employed at a national REIT
Pretty sure that’s Discounted Cash Flow
It is. I typed too fast and can't edit now
How did you spend $350k in down payment, mortgage interest on a $500k house?
Do you have a mortgage on it still? I don’t see that in your math. And what about the opportunity cost of your down payment?
Do you have a mortgage on it still? I don’t see that in your math. And what about the opportunity cost of your down payment?
Huh? FAANG has give much more than 10% returns...
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!
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
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
You would be correct if you were managing this property yourself. This would be incorrect if you have a property manager managing this property. You can work with your property manager to auto approve any house related work that is under a certain threshold. Otherwise, they will send you an invoice for you to pay at your convenience.
With that said, depending on the property manager, they will do some of the following: find tenants, place tenants, evict tenants, collect rent, find contractors/repairperson to fix issues, etc.
The property manager makes it mostly passive but probably an hour a month of work if that.
With that said, depending on the property manager, they will do some of the following: find tenants, place tenants, evict tenants, collect rent, find contractors/repairperson to fix issues, etc.
The property manager makes it mostly passive but probably an hour a month of work if that.
Sure, but then the property manager charges so much that it's probably not a profitable investment, or at least a much less profitable one. They typically charge a % of the rent, plus another fee for whatever activity they do- x number of dollars to visit the site, x dollars to show the property, x dollars to go to court, manage the contractors, and so on.
Now it's 'passive', sure, but no longer an 'investment'
Now it's 'passive', sure, but no longer an 'investment'
> Now it's 'passive', sure, but no longer an 'investment'
...unless the math adds up and you're still making a profit.
...unless the math adds up and you're still making a profit.
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.
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).
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).
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.
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.
The best way that I've made passive income is just through boring Vanguard index funds/target date funds.
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.
The best way that I've made passive income is just through boring Vanguard index funds/target date funds.
By passive I'll assume you mean less effort and risk than starting a new business that requires daily attention.
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.
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.
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.
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.
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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.
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.
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.
Edit:
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.
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.
Edit:
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.
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.
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.
Services I've personally invested in and would vouch for: - https://www.kuflink.com/ - https://www.loanpad.com/ - https://www.lendingworks.co.uk/ - https://www.abundanceinvestment.com/
You might like to try out some peer to peer loan based investments if you're after some fairly passive gains.
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.
Services I've personally invested in and would vouch for: - https://www.kuflink.com/ - https://www.loanpad.com/ - https://www.lendingworks.co.uk/ - https://www.abundanceinvestment.com/
You might like to try out some peer to peer loan based investments if you're after some fairly passive gains.
Publish books on Amazon. I've published 4 and make about $3k in profit per month, after paying for ads on amazon.
Don't write them yourself, that's a lot of work.
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.
The above isn't easy, nor is it particularly difficult.
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.
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).
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.
Publish on amazon. Run ads.
There's obviously more too it than this. If interested, look up the Mikkelsen twins or Dane McBeth on youtube.
Don't write them yourself, that's a lot of work.
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.
The above isn't easy, nor is it particularly difficult.
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.
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).
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.
Publish on amazon. Run ads.
There's obviously more too it than this. If interested, look up the Mikkelsen twins or Dane McBeth on youtube.
Well, he did create "an outline on the subject" and spent a few days on it. It is theoretically possible he is so talented that this creative work alone made it a worthy read.
Are the books any good? What are reviews like?
I like to think my books are good. One has over 900 reviews with an average of 4.8 stars. Two others have over 100 reviews with about a 4.6. The 4th one has about 20 reviews with 4.4 stars-ish (I didn't follow the formula on this one, my own fault).
I'm not the only one doing this, of course. Most of the books I see my competitors make are of lower quality, but they probably paid a lot less for them. In general, books made by people like me read like really long blog posts - because that's where most of the information comes from.
I'm not the only one doing this, of course. Most of the books I see my competitors make are of lower quality, but they probably paid a lot less for them. In general, books made by people like me read like really long blog posts - because that's where most of the information comes from.
Did you buy any of those reviews?
They are poor quality and clearly written by ghost writers.
I don't blame people for going for the easy money, but it's like paying "writers" to write thousands of articles about "best pool equipment 2021" to target keywords on Google just so you can soak up Amazon affiliate revenue. Sure you make money, but how many people are reading your "blog" as fact?
I don't blame people for going for the easy money, but it's like paying "writers" to write thousands of articles about "best pool equipment 2021" to target keywords on Google just so you can soak up Amazon affiliate revenue. Sure you make money, but how many people are reading your "blog" as fact?
Yeah, the review sites that drive affiliate revenue with content marketing SEO tend to hire low cost writers to do web searches and write articles, stopping just short of the plagiarism line, realizing that duplicate content isn’t good for SEO.
These sites aren’t going to to really test the pool cleaning equipment, the web hosting services being reviewed and ranked, learning Python tutorials. Nobody is going to pay anyone to test anything to make sure how the how-to cobbled together from three similar articles actually works.
These sites aren’t going to to really test the pool cleaning equipment, the web hosting services being reviewed and ranked, learning Python tutorials. Nobody is going to pay anyone to test anything to make sure how the how-to cobbled together from three similar articles actually works.
Wouldn't the author have to be knowledgeable about the subject? 30k words for $1000 sounds pretty low for an expert.
They do their own research too, but they're not experts. You'll have to get at least mildly informed on the subject to make the outline and make sure the writer stays on track. I tend to read several book on whatever the subject is to make sure my book captures the best information I can find.
Ghost written or quick buck books are super common in Google Unlimited or low priced books. I can now spot them pretty quickly. Tech books are an area where I’d go with a known publishing house that has a good track record.
Seriously, whatever happened to being an expert on a certain domain of knowledge? This sounds like a disgusting startup-esque approach to writing a book.
How much do you have to spend on ads to make the $3K? I I imagine it's a hefty sum?
Around $1000 - $1500. The $3k varies by month too. April and May have been slow, while Jan/Feb were really good.
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Incredible. Do you publish under a ghost name?
Yes, several. Each pen name has their own "personality" and focuses on different aspects.
There's something about this that just makes me really sad. I guess being in my late 30's I hold on to the flawed notion that there is sanctity in something that is 'published'.
Does anyone here want to read a book that wasn't written by an expert on the topic? How upset or sad would you feel if you spend several hours reading a book only to discover it was produced by an opportunist who picked that keyword and asked someone in a developing nation with no expertise about the subject to grok some blogs (which might or might not be factually correct) and pad out to make it a 3hr audiobook read.
I'm sorry, I just think it's a shitty thing to be doing. I'm not against making money (I'm a VC!) but it just undermines the integrity of the medium of books because now you have to sort out 'real' knowledgeable authors from this carpet bagging.
Does anyone here want to read a book that wasn't written by an expert on the topic? How upset or sad would you feel if you spend several hours reading a book only to discover it was produced by an opportunist who picked that keyword and asked someone in a developing nation with no expertise about the subject to grok some blogs (which might or might not be factually correct) and pad out to make it a 3hr audiobook read.
I'm sorry, I just think it's a shitty thing to be doing. I'm not against making money (I'm a VC!) but it just undermines the integrity of the medium of books because now you have to sort out 'real' knowledgeable authors from this carpet bagging.
On the one hand, I agree. On the other, Sturgeon's law. Surely you remember how terrible most of the books were in the tech section of B&N or Borders. Why should some publishing house that published a bunch of "X For Dummies" books be the only ones in on the game?
O’Reilly has been publishing good tech books for decades with books often written by a top subject matter expert.
Agreed. Not that Amazon is where I normally buy books anyway, but it makes me think twice baout doing so. Feels like a bit of a dilution of an otherwise well-regarded art form when someone can just be producing arbitrary books. That said, I suppose this isn't new, and has been happening with textbooks forever.
Sanctity is just another word for exclusivity.
Knowledge used to be reserved for the elite, locked behind closed doors that the majority never knew existed.
Then the printing press came along. Knowledge was commoditized, no longer reserved for those born into families of status. Society changed, and I’d like to think for the better. We began to see innovation like never before.
This evolution was not without burden. Knowledge can be irksome at times—after all, it requires a certain degree of mental exertion to process. Fortunately, the means to publish knowledge remained somewhat exclusive; one need not look further than a book store for an authority on any subject. If it’s in print, it’s trustworthy.
Then the internet came along and commoditized that, too. Now, we’re forced to analyze all information presented to us should we seek the truth. How do we tell what’s trustworthy? Why must we expend such effort to sort fact from fiction?
I see this as a natural progression, given our history as a society. We’ll adapt, and we’ll be better for it.
On the other hand, I’m some random person typing into the digital abyss while lying in bed. Am I a subject matter expert, or am I a 13-year-old who’s presently failing History? You’ll never know, and that’s the beauty of it: you’re stuck judging my statements without the context of authority or a librarian’s recommendation.
Nothing has changed here. You should always be questioning what you read. Open an encyclopedia from a few decades ago; you’re quite likely to find numerous mistakes on each page.
Ah, but you don’t want to waste time reading something that never even tried to be correct, right? Well, that’s a problem we haven’t solved yet: give everyone a voice, and all you hear is noise. Maybe some young, enterprising VC will sort that out for us, but exclusivity isn’t the solution.
Knowledge used to be reserved for the elite, locked behind closed doors that the majority never knew existed.
Then the printing press came along. Knowledge was commoditized, no longer reserved for those born into families of status. Society changed, and I’d like to think for the better. We began to see innovation like never before.
This evolution was not without burden. Knowledge can be irksome at times—after all, it requires a certain degree of mental exertion to process. Fortunately, the means to publish knowledge remained somewhat exclusive; one need not look further than a book store for an authority on any subject. If it’s in print, it’s trustworthy.
Then the internet came along and commoditized that, too. Now, we’re forced to analyze all information presented to us should we seek the truth. How do we tell what’s trustworthy? Why must we expend such effort to sort fact from fiction?
I see this as a natural progression, given our history as a society. We’ll adapt, and we’ll be better for it.
On the other hand, I’m some random person typing into the digital abyss while lying in bed. Am I a subject matter expert, or am I a 13-year-old who’s presently failing History? You’ll never know, and that’s the beauty of it: you’re stuck judging my statements without the context of authority or a librarian’s recommendation.
Nothing has changed here. You should always be questioning what you read. Open an encyclopedia from a few decades ago; you’re quite likely to find numerous mistakes on each page.
Ah, but you don’t want to waste time reading something that never even tried to be correct, right? Well, that’s a problem we haven’t solved yet: give everyone a voice, and all you hear is noise. Maybe some young, enterprising VC will sort that out for us, but exclusivity isn’t the solution.
People have got to make a living, by any mean. That's the state of the economy today, no small part by the effort of VC's.
because now you have to sort out 'real' knowledgeable authors from this carpet bagging
I don't believe that's difficult. You can almost always differentiate real books from the grift-type ebooks by looking at them by publisher. Big difference between serious non-fiction publishers and print on demand titles.
I don't believe that's difficult. You can almost always differentiate real books from the grift-type ebooks by looking at them by publisher. Big difference between serious non-fiction publishers and print on demand titles.
The problem is that if you're looking for information about a niche subject, there are sometimes independent researchers who study for their own fulfillment, and then self-publish or publish through small publishers or vanity publishers. If you happen to find a book like this it can be a treasure since it's literally several years labor of love on the topic you want to know about. That person is also happy to have reached someone interested in their topic, even if their financial reward is negligible, zero or negative.
Because of the 'business' described above, that book is now impossible to find. It's been swamped by hundreds of easily generated titles which are at best copy pasted from the wikipedia, at worst utter gibberish.
Because of the 'business' described above, that book is now impossible to find. It's been swamped by hundreds of easily generated titles which are at best copy pasted from the wikipedia, at worst utter gibberish.
I always want a recommendation I trust or a book chapter preview or an author I trust.
>sanctity in something that is 'published'
I'm not quite in my 30s yet but "published" in general vs "published by a specific publisher" (like O'rielly) seems really odd, especially after some of the absolute garbage we were forced to buy in college.
I'm not quite in my 30s yet but "published" in general vs "published by a specific publisher" (like O'rielly) seems really odd, especially after some of the absolute garbage we were forced to buy in college.
It’s time to let go of your naivety.
Who says the ghostwriter is not an expert on the topic? The above is quite similar to a startup incubator, there is a demand in the marketplace that's unmet, one hires people to meet that demand and develop a product after which customers buy it.
$1000 says he isn't.
At 3 cents/word, not only is the ghostwriter not an expert, they probably aren't even a good writer. That's less than what a decent typist would charge for material that's already written (transcribing from audio or handwritten manuscript).
Maybe. Looks like the OP says his books are pretty good with high ratings and a high volume of ratings as well, so they must be enjoyable enough to the people who buy them.
I’m sure we can trust the self publisher of a ghostwritten unedited cost-first keyword-selected book to never employ fake reviews. He’s only here to provide what’s best for his customer.
That's pretty disingenuous to say they employ fake reviews, regardless of whatever your opinions of self publishing are.
Why is it disingenuous? They've literally described a process optimised to produce "passive income" with absolutely no quality control at all.
Selection bias. People who see OP's books in the search results and conclude it's a shitty book/something is off/etc are not going to leave a review (on a book they didn't buy) to say so. People who spend $10 and 4hrs of their time are inclined to not want to feel like they just wasted that and so will positively review something to reinforce.
Since the person promoting the book has literally no interest in the content, it doesn't make sense that the writer would be an expert, nor that the book would be any good.
An expert ghostwriter would be undercut by a ghostwriter supplying copy-pasted material just good enough to get past the publisher. A publisher who actually cares about whether or not the book is worthless would outbid this publisher for the skills of the expert.
An expert ghostwriter would be undercut by a ghostwriter supplying copy-pasted material just good enough to get past the publisher. A publisher who actually cares about whether or not the book is worthless would outbid this publisher for the skills of the expert.
You hire ghostwriters through freelance sites so it’s possible but for sure not a given the ghostwriter will be an expert. It’s more likely the author would do a lot of web searches and cobble something together that’s most likely or some value but it’ll likely be a got-what-you paid for situation.
The big reason to get a ghost writer is because writing books is easy, editing them is hard. Amazon's search algorithm dings books for every little grammar, wording, and punctuation error. Unless you were an English major, you will spend 75% of your time getting every sentence perfect. Hiring someone to edit costs about the same as hiring someone to write.
A simple line editor shouldn't run you more than $200 for a 30k book.
What kind of topics do you write about? Is it programming/reference material like "Mastering framework X in lang Y"?
I won't say what category I focus on, but I will say that programming books don't sell well, in general. Some do quite well, but most don't.
Dog and bird training, growing plants, etc
Thanks yea that's what I figured, it's all about finding that niche and going for it.
You are a Ferengi, we get it.
"They're greedy, misogynistic, untrustworthy little trolls, and I wouldn't turn my back on one of them for a second."
That does not sound passive to me, ideally a passive income should require minimal amount of working hours outside of ones regular job
Passive income is about "do once, profit passively forever after" and this fits that -> write once, revenue forever.
No income source is truly "free". Either you pay with time or money.
No income source is truly "free". Either you pay with time or money.
https://www.forbes.com/sites/celinnedacosta/2021/12/28/pushi...
I looked the twins up. Looks like they've figured they can make more selling courses on what you describe.
A family member does FBA and does quite well. The book selling thing just sounds grim to me.
I looked the twins up. Looks like they've figured they can make more selling courses on what you describe.
A family member does FBA and does quite well. The book selling thing just sounds grim to me.
Maybe I'm being dumb - and there certainly is no rule written in stone about this - but I expect a level of craftsmanship and dedication from published books that only comes from years of research/experience. I would hate to spend my dollars and hours reading a book only to discover it was written by some ghost writer. It's the kind of thing I expect from a Medium article.
I can't exactly point out what, but it feels gross.
I can't exactly point out what, but it feels gross.
I hate everything about this. Every step in this process is about making money and nothing else.
Damn, this is one of the more disappointing things I’ve read on HN. Everyone is just trying to exploit the system for a dollar, I get it that’s capitalism. It’s just kind of saddening to me, it’s like the social media infection spreading. Where you can’t really trust what you read because you have a fake author, hiring a maybe expert to write a book. Hell, that ghost writer may have developed a good algorithm for pulling together information for that book, or just copying and pasting from places. I guess I just have issues with the do whatever I can to earn a buck thing.
This is not passive advice whatsoever. It all requires regular "maintenance".
First of all thanks for sharing "inside" secret. Old me would have judged you but not any more. Man got to do what he need to do. All the best :)
Now you have given Instagramers the secret sauce to "How to Launch a book on Amazon without any work and make a killing". Be ready for the Tsunami of these creators who are charging money to teach others how to do it.
Where do you go to hire the ghostwriters, or did you find one that you go back to each time?
I tend to use hotghostwriters.com. The output isn't bad, but I still end up paying quite a bit for editing.
You should write a book how one can do it:)
Don't people give it like 1-2 star reviews and it tanks with a few months?
This is just so incredibly filthy.
Do you run the ads on Amazon itself, or on Google Ads, or Reddit ads, or somewhere else?
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.
I assume you're talking about being landlord of an apartment in a larger apartment complex where a property manager takes care of many apartments at the same time? I'm asking because my impression is that this scales better and should therefore be significantly cheaper than paying someone to manage a single apartment or house somewhere. (Besides, with a house or I'd imagine a lot more fixes being necessary over time.)
Also, how many tenants has this apartment (have these apartments) that you're managing(?) had in those ten years?
PS: Since I've actually been dabbling with the idea of buying property in Colombia, may I ask in which city you are? :)
Also, how many tenants has this apartment (have these apartments) that you're managing(?) had in those ten years?
PS: Since I've actually been dabbling with the idea of buying property in Colombia, may I ask in which city you are? :)
Here exist companies and individuals that do it.
In fact is unusual your rent is directly to the owner, is the norm you pay the "Arrendadora" instead.
The case of apartment is a bit different. All complex have "administration" that everyone pay, but this is mostly in "closed complex". If the building is in the open, is more common is a person that take the role.
BTW: I'm close to Medellin in a town called El carmen del Viboral. Right now exist a lot of demand for out-of-city property...
In fact is unusual your rent is directly to the owner, is the norm you pay the "Arrendadora" instead.
The case of apartment is a bit different. All complex have "administration" that everyone pay, but this is mostly in "closed complex". If the building is in the open, is more common is a person that take the role.
BTW: I'm close to Medellin in a town called El carmen del Viboral. Right now exist a lot of demand for out-of-city property...
Gracias, parce, por su respuesta! :) (Incidalmente, el lugar donde quería buscarme un apartamento es Medellín.)
> All complex have "administration" that everyone pay, but this is mostly in "closed complex".
Would this administration also take care of fixing things and taking on the role of "arrendador" if I, as the owner, rent out the apartment to someone else? (Provided I pay them, of course.) Or would I have to hire someone else for that?
> All complex have "administration" that everyone pay, but this is mostly in "closed complex".
Would this administration also take care of fixing things and taking on the role of "arrendador" if I, as the owner, rent out the apartment to someone else? (Provided I pay them, of course.) Or would I have to hire someone else for that?
In the closed ones I lived before they pay for most stuff. I don't remember exactly where is the line (but is part of the agreements and part of the law what they can do. For example, some set a end-time for loud parties)
In Finland you don't buy apartments/flats, instead you buy a share of the company that owns the block.
The housing-company takes a fee every month which is used for common-repairs, replacing the roof, etc.
If you rent out your flat the tenant pays for their own insurance to protect their possessions, and the housing-company takes care of things like leaks, broken windows, etc.
So being a landlord is mostly hands-off. You have to advertise and pick your tenant. Then once they move in if they have problems with their stuff they take care of it, and if they have a problem with the water, etc, they call the housing company.
So being a landlord of this kind of property is almost entirely painless and hands-off. Of course if there is a big repair, like a new roof, or pipe-works, then the fee paid to the housing company (which the landlord will pay) will go up sharply for a good few years.
The housing-company takes a fee every month which is used for common-repairs, replacing the roof, etc.
If you rent out your flat the tenant pays for their own insurance to protect their possessions, and the housing-company takes care of things like leaks, broken windows, etc.
So being a landlord is mostly hands-off. You have to advertise and pick your tenant. Then once they move in if they have problems with their stuff they take care of it, and if they have a problem with the water, etc, they call the housing company.
So being a landlord of this kind of property is almost entirely painless and hands-off. Of course if there is a big repair, like a new roof, or pipe-works, then the fee paid to the housing company (which the landlord will pay) will go up sharply for a good few years.
There are two gotcha's (based on Swedish experience) your house company might change the rules not allowing rentals or simply deny you the right to rent because some renter broke the rules. The second one is the monthly fee, it is included in the rent but it can be changed by the management based on the building's need.
Another problem, at least here in Sweden, is that the law prohibits making an "unreasonable" gain on rentals so you can't compensate on bad periods by raising the rent.
Another problem, at least here in Sweden, is that the law prohibits making an "unreasonable" gain on rentals so you can't compensate on bad periods by raising the rent.
I loved our rental apartment when I lived in Finland!
For those who had never been there, here's what we had:
Studio flat with a kitchen and decent size bathroom. Nothing special so far. There were 2 storey basement: 1 floor for bikes, some bulky stuff, while the second,much colder,for food storage. There was also a laundry room: semi-industrial washing machine, thumble drier, some ironing device and a spacious clothes drying room with a dehumidifier. Even though all the apartments had washing machines, to have a dedicated space for this was super useful. The there was a sauna too for an additional €15/month. The playgrounds for kids outside were really nice and I even saw how they replaced perfectly fine slides and other equipment with brand new stuff. All of this in an area with apartment blocks built in 70-80s on cheap. In London you'd need to pay a fortune to have something similar. Finland always felt like designed for people,not the other way around.
I did come to love the storage for prams, especially in winter-time. That meant we didn't need to take ours inside our flat, when it was dripping snow and ice.
The communal gardens that are shared between buildings are really nice for children. As you say there is often equipment as well as toys, a sandbox, and similar.
We've got something like 11 children aged 1-11 in our buildings, and they're often playing together on weekends and in the early evenings.
The communal gardens that are shared between buildings are really nice for children. As you say there is often equipment as well as toys, a sandbox, and similar.
We've got something like 11 children aged 1-11 in our buildings, and they're often playing together on weekends and in the early evenings.
> while the second,much colder,for food storage.
That’s definitely unusual.
That’s definitely unusual.
I also live in Colombia. Being a landlord is definitely something that I might consider doing in the future. My current landlord does shit and we still have to pay 950.000 COP. Me and my wife cannot even move to a better place because there's not enough extra money to do the switch. Renting sucks, specially in third world countries.
Several considerations to what other commenters have already said:
* 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).
* 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?
* 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.
* 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).
* 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?
* 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.
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.
Would you mind elaborating on why you dislike ETFs? From my point of view, they provide retail trades the opportunity easily to allocate a portfolio among various sectors. Does your dislike of ETFs extend to "old-school" mutual funds, or is there something about ETFs in particular that turns you off of them?
The criticism is that they do not lead to efficient allocation of capital (the point of the stock market) but rather a feedback loop where the ETF fund has to buy TSLA and AMZN because they are in the top 500, and that makes them worth even more, keeping the in the 500s forever, and not because they produce value and were deemed a good choice by a professional investor that did his due diligence, but simply because of the ETF feedback loops.
Maybe this is just a pedantic terminology thing, but what you're talking about is much narrower than the ETF.
I think the image of an ETF you're seeing is of the S&P 500 index fund or total stock market index fund.
However, an ETF is just a method of exchanging securities. There are thousands of ETFs in all kinds of different categories: https://etfdb.com/etfs/
I personally subscribe to the idea that the fears about passive indexes ruining the market with feedback loop economics are overblown.
What they really did was bring down the cost of actively managed funds by providing competition. Not only that, in the post-Bogle world there are a lot of "hybrid" funds and robofunds that offer index-like expense ratios with more opinionated holdings than VTI.
I think the image of an ETF you're seeing is of the S&P 500 index fund or total stock market index fund.
However, an ETF is just a method of exchanging securities. There are thousands of ETFs in all kinds of different categories: https://etfdb.com/etfs/
I personally subscribe to the idea that the fears about passive indexes ruining the market with feedback loop economics are overblown.
What they really did was bring down the cost of actively managed funds by providing competition. Not only that, in the post-Bogle world there are a lot of "hybrid" funds and robofunds that offer index-like expense ratios with more opinionated holdings than VTI.
Ah yes you are absolutely right. I meant „stock index ETF“ when I said „ETF“. But then I believe the parent posters were also referring to index ETFs when they said „ETF“, so it‘s just us normies polluting the name spaces again :-)
If this is true it should be great for traders who are trading on performance/news/economy etc. when they made their profits they have an index fund wanting to buy their stuff so very liquid. But then such trading activity should allow price discovery and if not there is a gap for more traders
To add to the sibling comment, not only do they result in huge amounts of capital being spread evenly across an index instead of efficiently to deserving companies, but they inflate the entire equities market, even when it's overheated or drowning in debt, as a consequence of the "buy and hold forever" mentality. I think we will see result in larger bull runs and larger eventual bear markets (while it will take a bigger dip to get people to sell, there will be a ton of relative household net worth available to sell when there is a strong enough impetus).
Instead of laws enabling ETF's and long term capital gains discounts, I'd rather have a government with a less inflationary monetary policy, where the key to wealth for the average person is saving.
Instead of laws enabling ETF's and long term capital gains discounts, I'd rather have a government with a less inflationary monetary policy, where the key to wealth for the average person is saving.
Cheeky-and-also-serious response:
Soil, for the food you grow to eat, share, or sell. Much about a green, growing area is passive income for is.
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.
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.
Soil, for the food you grow to eat, share, or sell. Much about a green, growing area is passive income for is.
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.
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.
No need for soil for some plants. Check-out Hydroponics[0] no need soil for farming. You could grow indoors or outdoors. That's free food for the future. There's a lot of ongoing hype in this right now. Youtube, facebook groups, reddit, blogs . . .
[0] - https://en.wikipedia.org/wiki/Hydroponics
[0] - https://en.wikipedia.org/wiki/Hydroponics
Yes, and soil can be such a rich place for life to exist and carry on. Hydroponics is cool and useful, and I’m going to keep converting my previously-grass yard into meadow, woodland, and no-till farm because I love the feeling of being surrounded by so much life, above and below.
Soil is also a carbon-sink. At the Bell Museum in the Twin Cities there are examples of prairie grasses whose roots went down about six feet (maybe more; trying to be conservative here).
I live in a graveyard of massive, long-dead tree-stumps, new trees around my age. What it used to be I like to imagine and to help bring about again, for its own sake.
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My advice is this: Think about your unique domain knowledge.
Ask yourself:
* What do I know that gives me an advantage over the average joe?
* What other resources do I have that give me an advantage over the average joe?
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.)
Ask yourself:
* What do I know that gives me an advantage over the average joe?
* What other resources do I have that give me an advantage over the average joe?
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.)
"What do I know that gives me an advantage over the average joe?
What other resources do I have that give me an advantage over the average joe?"
What if my answers are none and none?
What other resources do I have that give me an advantage over the average joe?"
What if my answers are none and none?
Some of the best advice I've ever heard regarding this is that you don't have to be an expert, you just have to know a little bit more than someone else. So take whatever you've recently learned, write it up, package and sell that. People tend to overestimate the level of knowledge required to sell advice. People pay for beginner level courses all the time.
Marge to Lisa: “I could give piano lessons!”
Lisa: “But you don’t play the piano…”
Marge: “I just gotta stay one lesson ahead of the kid!”
Chances are, you're not thinking about it hard enough.
If you truly think you have nothing to offer, then start acquiring something to offer. Put in the hard work and thought into acquiring specialized skills and relationships with people. It takes time (usually a lot of it), but it is not complicated.
If you truly think you have nothing to offer, then start acquiring something to offer. Put in the hard work and thought into acquiring specialized skills and relationships with people. It takes time (usually a lot of it), but it is not complicated.
Eh, I've done that in the past and it didn't mean anything. They just outsourced the tech/system that I became an expert at. You need luck in addition to expertise, and that's something I can't control.
Yeah, nobody can control that, so you can either give up or keep working hard at things until you "get lucky". One has the possibility of success and one doesn't.
Not necessarily. You get hit by a Mercedes while crossing the street and you could just luck into money without hard work.
I used to work at an insurance company. It was interesting to listen to some of the underwriters talk a bout how trivially easy it can be to scam a small mom & pop business through a fake trip & fall "accident".
Staking cryptocurrency in a very conservative way has produced the following incomes:
$4600 - 2017
$23,000 - 2018
$3700 - 2019
$2500 - 2020
2021 is shaping up to look like 2018 again but I haven't run the numbers
$4600 - 2017
$23,000 - 2018
$3700 - 2019
$2500 - 2020
2021 is shaping up to look like 2018 again but I haven't run the numbers
Staking as in PoS?
Yes PoS is _part_ of the consensus algo for this coin (Decred) - only 30% of the block reward goes to PoS while PoW miners (60%) and the the treasury (10%) receive the rest of the reward
Which currencies? How much have you had to stake to make these kinds of returns?
I just stake decred. Years ago I was much more ambitious and after losing money in multiple exchange hacks, and then losing nearly everything again in the ethereum DAO exploit, I will never again leave coins around outside of my own custody. Few cryptos let you stake easily while maintaining complete custody of your coins
Last I checked, I averaged just over the current annual roi at about 5%, but back in 2017 roi was higher at like 7% so you can do the math to see how much I have :)
It's all a bit of a blessing and a curse though. The year I made over 20k staking, I actually paid ~35% tax on that without realizing any profit in USD but thankfully I had enough money to handle that
Last I checked, I averaged just over the current annual roi at about 5%, but back in 2017 roi was higher at like 7% so you can do the math to see how much I have :)
It's all a bit of a blessing and a curse though. The year I made over 20k staking, I actually paid ~35% tax on that without realizing any profit in USD but thankfully I had enough money to handle that
Cool thanks for sharing. The volatility can get brutally expensive. I sell NFTs for ETH, which of course have to pay income tax on, but if suddenly ETH tanks.... ouch
Yeah.. After the 2017 ICO bubble popped I had to take out 6 months salary in credit just to pay the IRS. (The alternative was liquidating every crypto I held at a massive loss)
It felt like I wasted everything butttt never again! I've already sold 12 months+ salary from a few other cryptos this cycle (:
It felt like I wasted everything butttt never again! I've already sold 12 months+ salary from a few other cryptos this cycle (:
In how far are your investments "passive"? What does "conservative" mean?
I mean, with ETFs I'd trust that eventually they will increase in value (again) but given the high volatility of cryptocurrencies, I'd probably be selling and re-investing at a much higher frequency.
EDIT: Never mind, I now see your other comments and read up on "staking"[0] and "decred"[1]. Looks like I've been out of the loop.
[0]: https://staking.com/
[1]: https://staking.com/decred/
I mean, with ETFs I'd trust that eventually they will increase in value (again) but given the high volatility of cryptocurrencies, I'd probably be selling and re-investing at a much higher frequency.
EDIT: Never mind, I now see your other comments and read up on "staking"[0] and "decred"[1]. Looks like I've been out of the loop.
[0]: https://staking.com/
[1]: https://staking.com/decred/
"passive" in that I open up my wallet 1-2 times per week and initiate the staking process with my available funds. Takes like 15 minutes / week and I'm usually making coffee while it's happening, but really I should just setup the auto ticket buyer and leave my machine on 24/7. That would bring it down to 0 min/week given my rasp pi doesn't randomly fail
Funds that are locked randomly get called to "vote" (where I earn my reward) and re-enter my wallet so re-entering the lottery immediately would be more advantageous too
Also it feels passive because even though staking nodes need to be online at all times and require legit setups, I use delegated staking so I can select an operator which I pay a fee (0.5% in my case) in exchange for their redundant always-online setup so it's a painless ux
Funds that are locked randomly get called to "vote" (where I earn my reward) and re-enter my wallet so re-entering the lottery immediately would be more advantageous too
Also it feels passive because even though staking nodes need to be online at all times and require legit setups, I use delegated staking so I can select an operator which I pay a fee (0.5% in my case) in exchange for their redundant always-online setup so it's a painless ux
What's your ROI like? Do you have a big initial investment to get this kind of income?
ROI is just under 5% right now
Minimum entry into decred staking is 37,000 USD unless you look into ticket splitting
I have over a few thousand decred which I'm already planning to never sell so staking is a no-brainer. My cost-basis is probably $25 so my initial investment was much lower
Minimum entry into decred staking is 37,000 USD unless you look into ticket splitting
I have over a few thousand decred which I'm already planning to never sell so staking is a no-brainer. My cost-basis is probably $25 so my initial investment was much lower
I truly don't mean to be snarky, but I think you're doing worse than an incredibly wide array of medium-risk mutual funds and ETFs.
For example: https://investor.vanguard.com/mutual-funds/profile/VSMGX
For example: https://investor.vanguard.com/mutual-funds/profile/VSMGX
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.
[0] https://mudrex.com/
[0] https://mudrex.com/
It's hardly fair to judge a crypto fund on the last year. They would have had to be spectacularly incompetent to lose money.
Agreed, and sometimes it would have been better to just HOLD instead. But there's plenty of bots with different approaches and risk management. Some do better on side markets or even downturn markets. Some do better on a bull run. Just need to adjust you portfolio accordingly.
Opportunity abounds in the defi crypto space. Being a liquidity pool provider on a usd stable coin pair yields ~40% apy currently[1].
[1]https://app.beefy.finance/
[1]https://app.beefy.finance/
What is the risk with stablecoins?
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.
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.
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.
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)
Graham Stephan talks about this in his YouTube video: https://www.youtube.com/watch?v=h8wNUaBgZTk
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.
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. https://www.youtube.com/watch?v=2uogn4qtZ8U
Also, if there's a downturn in the market, usually people that own homes move to rental properties.
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: https://www.biggerpockets.com/forums
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.
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.
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)
Graham Stephan talks about this in his YouTube video: https://www.youtube.com/watch?v=h8wNUaBgZTk
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.
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. https://www.youtube.com/watch?v=2uogn4qtZ8U
Also, if there's a downturn in the market, usually people that own homes move to rental properties.
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: https://www.biggerpockets.com/forums
Graham has a great channel for this. Love his work. This is known as the Brrrr method I believe
I think you missed mentioning the greatest thing about rental properties: You're buying the property using someone else's money (via a mortgage). There is literally no other investment besides real estate that allows you to do this.
I did. Fourth paragraph number 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
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
What I have:
1. dividend growth portfolio
2. p2p lending
3. lifetime affiliate commissions for referrals
4. SaS website with paid membership
What I plan to have in the future:
1. crypto lending
2. real estate
1. dividend growth portfolio
2. p2p lending
3. lifetime affiliate commissions for referrals
4. SaS website with paid membership
What I plan to have in the future:
1. crypto lending
2. real estate
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
Credit card cash back, it’s easy to get 5% on most purchases. That’s $1,000 tax-free a year for $20,000 expenses you’ll have either way.
I still would rather not spend or cut down $20k expenses to $19k or less. Somehow not spending money feels like a better option.
Then do the 5% math on $19k spending (or $15k), it doesn’t have to be $20k.
In the US $20k of credit card expenses is not insane as an adult living by yourself.
After factoring in groceries, gas, insurance, utilities, a few dinners out and a couple flights a year, that’s very reasonable.
I am a relatively frugal person who spends $40k a year in a HCOL area in the US (but get paid 25X that fortunately), and $20k is my credit card spending, I basically put everything on my cards except for rent. Cards are in autopay every month, so no risk of extra fees. I also have enough financial discipline to obviously not spend more than I strictly need to, I am a very aggressive saver actually.
In the US $20k of credit card expenses is not insane as an adult living by yourself.
After factoring in groceries, gas, insurance, utilities, a few dinners out and a couple flights a year, that’s very reasonable.
I am a relatively frugal person who spends $40k a year in a HCOL area in the US (but get paid 25X that fortunately), and $20k is my credit card spending, I basically put everything on my cards except for rent. Cards are in autopay every month, so no risk of extra fees. I also have enough financial discipline to obviously not spend more than I strictly need to, I am a very aggressive saver actually.
It makes me sad that $20000 is my annual income and I'm a okay (I guess?) developer!
Where are you located? That seems like an insanely low salary.
Equities and ETFs already give you access to those other mechanisms. For example, you can get exposure to real estate through REITs
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. https://www.codingwithricky.com/
I'll probably end up doing the same pretty soon: there's quite some money to be made in the sector I work+ no serious SEO work done by any of the main players,so a website with 100-200 blog posts would do nicely.
Interested to know the source of this income. Is it through affiliated links? Selling your product?
Here's what we do:
- Max out 401k
- Automated contribution to Roth (up to max), can also use backdoor traditional conversion strategy here
- 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.
- Crypto (10% risk exposure here, or more depending on your comfort levels)
- 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.
- Keep debt low or completely gone
- Don't buy expensive stuff
- 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)
- 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
- 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).
- save up for goals and things you want like a family vacation
- Minimize your subscription services
- 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.
- 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)
The goal is to try and have a portfolio that can beat standard inflation *and* lifestyle inflation.
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.
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.
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.
- Max out 401k
- Automated contribution to Roth (up to max), can also use backdoor traditional conversion strategy here
- 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.
- Crypto (10% risk exposure here, or more depending on your comfort levels)
- 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.
- Keep debt low or completely gone
- Don't buy expensive stuff
- 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)
- 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
- 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).
- save up for goals and things you want like a family vacation
- Minimize your subscription services
- 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.
- 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)
The goal is to try and have a portfolio that can beat standard inflation *and* lifestyle inflation.
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.
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.
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.
Buying real estate for short-term or long-term rentals is buying yourself a second job.
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
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.
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.
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
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.
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.
Sincere question: why is this better than going with the vast array of mutual funds and ETFs available? Is it the return rate? Something else?
It seems like your typical ETF or mutual fund is easier to get into and get out of, just a few clicks on your brokerage of choice.
Your answer brought up the obvious general answer: the only way to make passive income from investments is to already have a lot of money. To me there's a point where the method of investment almost seems like an irrelevant detail.
It seems like your typical ETF or mutual fund is easier to get into and get out of, just a few clicks on your brokerage of choice.
Your answer brought up the obvious general answer: the only way to make passive income from investments is to already have a lot of money. To me there's a point where the method of investment almost seems like an irrelevant detail.
I looked into syndication and commercial real estate earlier this year. My primary motivation was to diversify my holdings.
I ultimately bought a house where I could rent rooms out on airbnb or to renters instead of going with a syndication. The main factor was getting leverage: a 30 year mortgage at 2.8% APY is basically free money.
Airbnb is not passive, but I look at it this way: I'm going to live in a house anyways, I might as well get into the business of living.
I ultimately bought a house where I could rent rooms out on airbnb or to renters instead of going with a syndication. The main factor was getting leverage: a 30 year mortgage at 2.8% APY is basically free money.
Airbnb is not passive, but I look at it this way: I'm going to live in a house anyways, I might as well get into the business of living.
This is what a lot of folks are missing- real estate investment returns aren’t necessarily higher than other vehicles but the leverage is awesome.
The leverage makes a lot of sense.
I do assume you can’t just take out a loan to join a syndication, but lots of people rent duplex units and vacation homes as you describe. Thanks for the answer!
I do assume you can’t just take out a loan to join a syndication, but lots of people rent duplex units and vacation homes as you describe. Thanks for the answer!
You are correct that an ETF can provide similar exposure with much better liquidity (ease of getting in and out).
A few possible reasons to go private: a) smaller and more entrepreneurial operators can produce better returns b) capturing the illiquidity premium.
A few possible reasons to go private: a) smaller and more entrepreneurial operators can produce better returns b) capturing the illiquidity premium.
I knew a person running one of these in the UK. It was basically a massive con, where the investors took all the risk and he took all the profit.
So buyer beware.
So buyer beware.
Use first principles to consider the likelihood of such a thing even existing.
If you want really passive income, try municipal bonds, most are tax free at Federal and state level.
Buy crypto, and lend it at 20-1000% apy using something like harvest.finance
That looks quite risky
https://news.bitcoin.com/defi-protocol-harvest-finance-hacke...
https://news.bitcoin.com/defi-protocol-harvest-finance-hacke...
Can't argue against that. I'll read up more on it since I plan to start using DeFi investments in the near future.
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.
Ive not put money into crypto as I dont see the real value/future while recognising I could be completely wrong and many people smarter than me believe otherwise.
But my logic to this is;
1) People need to consider the government, they make billions from domestic currency plus use it as a key tool to control the economy. Once these 2 facets are being affected do you think the government will not have resistance? Maybe not if its pervaded into society and has political backlash but there has to be political pushback at some point as govt will not want to let these go. For example some people say Libya war was in part over Gadhafi trying to move away from the dollar to a Afro-dollar
2) My understanding is bitcoin is limited by choice and not absolute. Bitcoins protocol can be updated and as time goes on there will likely be pressure to do so, and with this comes rise as if the wrong decisions are made it could be bad.
3) Crime and terrorism will likely take away the anonymity benefit. Like this recent oil pipeline hack, they wanted bitcoin payment. Once it gets linked more to terrorism, fraud and crimes like paedophile rings there is going to be huge pressure to regulate away the anonymity so its likely another benefit will evaporate.
4) Generally I dont see much consumer use or growth in use. There are high transaction fees, capital gains implications, and a great alternative called money. So from a usge (not storage) view there is little incentive to come across to bitcoin type currency day-to-day though I respect this one can quickly change but at the moment its more speculative value for store of wealth backs by the hope of scarcity, but as mentioned that's not absolute.
5) There is a lack of protection. If I get scammed online my credit card deals with it, or if I have shares/property there are legal systems to ensure ownership stays with me but crypto, do the wrong thing, or join the wrong exchange, you may find its all gone one day and that carries huge risk which now offers huge reward but once growth slows do you want to carry that?
Generally, as I said I dont profess to be correct and recognise I may well be telling my grandkids one day when I could have bough bitcoin @$65k and been rich now but I feel when you pull back to macro view it feels more speculative/FOMO that a product of value, to me anyway.
But my logic to this is;
1) People need to consider the government, they make billions from domestic currency plus use it as a key tool to control the economy. Once these 2 facets are being affected do you think the government will not have resistance? Maybe not if its pervaded into society and has political backlash but there has to be political pushback at some point as govt will not want to let these go. For example some people say Libya war was in part over Gadhafi trying to move away from the dollar to a Afro-dollar
2) My understanding is bitcoin is limited by choice and not absolute. Bitcoins protocol can be updated and as time goes on there will likely be pressure to do so, and with this comes rise as if the wrong decisions are made it could be bad.
3) Crime and terrorism will likely take away the anonymity benefit. Like this recent oil pipeline hack, they wanted bitcoin payment. Once it gets linked more to terrorism, fraud and crimes like paedophile rings there is going to be huge pressure to regulate away the anonymity so its likely another benefit will evaporate.
4) Generally I dont see much consumer use or growth in use. There are high transaction fees, capital gains implications, and a great alternative called money. So from a usge (not storage) view there is little incentive to come across to bitcoin type currency day-to-day though I respect this one can quickly change but at the moment its more speculative value for store of wealth backs by the hope of scarcity, but as mentioned that's not absolute.
5) There is a lack of protection. If I get scammed online my credit card deals with it, or if I have shares/property there are legal systems to ensure ownership stays with me but crypto, do the wrong thing, or join the wrong exchange, you may find its all gone one day and that carries huge risk which now offers huge reward but once growth slows do you want to carry that?
Generally, as I said I dont profess to be correct and recognise I may well be telling my grandkids one day when I could have bough bitcoin @$65k and been rich now but I feel when you pull back to macro view it feels more speculative/FOMO that a product of value, to me anyway.
The biggest risk issue to me is it takes a lot of real cash to flow into crypto mining to sustain current prices. I saw $200m a day across all crypto mentioned and I can believe that! So crazy money to sustain prices, making it susceptible to popping.
And since people buy because it goes up and vice versa, a crash will have a vicious cycle effect. So mathematically speaking a crash is coming the question is when. After the crash another bubble will build up again of course!
Very long term it could be future money (a lot of issues need to be ironed out!) or looked on as a weird thing of the past or maybe it’ll be around forever and bubble up every now and then.
Very long term it could be future money (a lot of issues need to be ironed out!) or looked on as a weird thing of the past or maybe it’ll be around forever and bubble up every now and then.
1) Which government? Germany: Allows exchange traded funds on Bitcoin; tax-free cash-out if you hold longer then a year; US? Tesla is holding BTC on their balance sheet, Goldman Sachs and others are offering it and the ETF might finally be approved by the end of the year.
2) Noone involed in BTC wants to change that. The miners have control over it, but who in their love of mind would vote to increase the supply and basically devalue your savings?
3) There is no anonomity effect on BTC and never was. It is all tracable.
4) User growth? Not even 1% of the population have BTC.
5) There are custodty solutions. Or just store your BTC on a cold wallet, remember the recovery phrases and throw away your Ledger or whatever. It doesn't get more secure than that. If there is no hardware wallet, noone can access your BTC.
The Macro View IS Crypto, or part of it. With 5G and 6G, electrified cars, IoT etc., crypto is basically embedded in the digital world. Bitcoin is not crypto and is basically for Boomers, the space already moved 10x beyond Bitcoin.
2) Noone involed in BTC wants to change that. The miners have control over it, but who in their love of mind would vote to increase the supply and basically devalue your savings?
3) There is no anonomity effect on BTC and never was. It is all tracable.
4) User growth? Not even 1% of the population have BTC.
5) There are custodty solutions. Or just store your BTC on a cold wallet, remember the recovery phrases and throw away your Ledger or whatever. It doesn't get more secure than that. If there is no hardware wallet, noone can access your BTC.
The Macro View IS Crypto, or part of it. With 5G and 6G, electrified cars, IoT etc., crypto is basically embedded in the digital world. Bitcoin is not crypto and is basically for Boomers, the space already moved 10x beyond Bitcoin.
Solid crypto projects staking
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.
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.
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.
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.
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.
I’m doing some eBay arbitrage for about $200 a month profit but I’m just starting.
I call it arbitrage as I buy at consumer prices from a store online and sell on eBay for a profit.
I profit even when paying listing fees, shipping and PayPal fees.
I call it arbitrage as I buy at consumer prices from a store online and sell on eBay for a profit.
I profit even when paying listing fees, shipping and PayPal fees.
It's not a passive investment.
how does this work in practice? do people not realize they are paying above the store price?
I think because the item is shipped from overseas not everyone wants to do that and wait the few extra days. Even though it’s ordered from a standard online shop from the brand.
I mean, people also don't go checking around every sale for items. But I would be curious to know what lengths OP goes to to identify items.
Identifying is the problem. It’s usually when I think “wtf why is this more expensive on eBay” when buying something for myself.
Then I check the number sold and think “oh someone is making some money here”
I don’t do anything special and realise I may have got lucky with this one.
I found another item like this in theory but I listed on this week and it hasn’t sold. So we will see.
Then I check the number sold and think “oh someone is making some money here”
I don’t do anything special and realise I may have got lucky with this one.
I found another item like this in theory but I listed on this week and it hasn’t sold. So we will see.
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.
[0] https://etke.cc
[0] https://etke.cc
You have yourself a testimonial, that made me
chuckle! Being your own customer is fun though.
Yep, I literally my own customer, because my hs managed the same way as other customers :D
Sadly, not every customer wants to post review, because of privacy. I understand them, tho
Sadly, not every customer wants to post review, because of privacy. I understand them, tho
(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.
(2) PROFIT!!!
(2) PROFIT!!!
I run a tech/programming related blog which helps me to earn both active and passive income in form of affiliate, guest posts, ads and gigs.
ebooks, mobile apps, online services, affiliate websites... tons of options, depends on what you're into.
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?
What other kind of passive income or cash flow helping investments are out there?