Passive income is an investment strategy that results in regular earnings from a supplementary source. The two main sources of passive income are rental property and royalties or dividends from businesses that you don’t actively participate in. Each type of passive income has pros and cons and has the potential to supplement your annual income. Here’s a list of some common passive income ideas and how they work.
1. Rental Income
Investing in a rental property takes hard work but it’s an effective way to earn passive income. You could invest in residential property and rent out to tenants. Another option is to invest in a rental home such as a condo and rent out to travelers. Vacation rental management experts know the ins and outs of the rental market. When taking on an investment property it’s a good idea to hire a professional management company to manage your property.
VacayAZ is a Scottsdale vacation rental property management company that can handle all of your short-term vacation rental needs while delivering outstanding customer service, amenities, and concierge services. The property management company’s top priority is to help you earn as much income on your investment opportunity as possible. The rental company has years of experience with luxury real estate management in AZ. Travelers will walk into your vacation rental to find everything in tip-top shape and want for nothing when you work with a professional rental management company to handle all the preparations.
2. Affiliate Marketing
Affiliate Marketing allows you to earn a commission on products that you promote online. Affiliate marketers can have a direct affiliate relationship with a company or earn through a commission platform such as the Commission Factory or Amazon affiliate.
Affiliate marketers are website owners, social media influencers, and bloggers who sponsor products on their site or social media accounts. Whenever a visitor follows the product link and makes a purchase, the site owner earns a commission. The only downside to affiliate marketing is that it takes time to create content that will attract readers.
3. Alternative Investments
Investors interested in alternative investments in commercial real estate, art dealers, and marine finance can find investment opportunities on Yieldstreet. The alternative investment platform requires a minimum investment of $10,000 by an accredited investor to secure debt investments in real estate investment, commercial finance, litigation finance, settlement financing, legal settlements, tangible assets, liquid assets, vessel acquisition, and fine art.
Yieldstreet review features investment offerings based on minimum investment, annual return, and investment risk. The investment platform charges an annual management fee, an originator listing fee, and some types of investments have an annual fee that increases after the first year. Accredited investors are those with a net worth of more than $1 million, but Yieldstreet Investment also offers individual investors the opportunity to invest in privately structured credit deals.
4. Peer-to-Peer Lending
A rewarding investment option with high yield on investment is peer-to-peer lending. A P2P loan is a personal loan between an individual investor or lender and borrower that is facilitated through a third-party intermediary. You, the lender, earn passive income through interest payments made on the loan. The main con with P2P lending is the risk of default on an unsecured loan, so always do your own due diligence on prospective borrowers. Making the minimum investment on several loans is a great way to diversify your investment portfolio.
5. Dividend Stocks
A potentially lucrative investment strategy is to invest in dividend stocks whose cash dividends are paid on a quarterly distribution. The more shares you own, the higher returns you will see. Understanding the stock market and choosing the right stocks is tricky for non-professionals. Investigate each company and do your due diligence when researching their financial track record.
There’s a passive income opportunity for every type of investor. From real estate and asset management to investing in stock market shares and private lending, there are plenty of ways to earn extra money on the side.