“Investment” is a very broad term for a number of things. You could invest in stock market shares to gain income, you could invest in a Kickstarter project to gain something cool or useful, or you could invest in a property to rent it out for income. Whatever you do, paying money upfront for a chance of positive gain in the future can be considered an investment.
But what type of investments can make you passive income? Read on to find out more.
Though it takes a while to get running, real estate can generate some very large passive income numbers. You’ll need to be the owner of some property or have the money to start investing in real estate, but the passive income is fairly predictable and easy to deal with especially if you have the help from a tax lawyer to give you guidance and assistance on how to handle your property. They’ll also help you pay your taxes to boot, which can be a hassle to manage if you own property for the sake of investing.
Your income will come from renting a property out to prospective tenants. There are many factors to consider, such as registering your property with an estate agent or looking for potential renters on your own. You’ll also have to trust your tenants because it’s possible that they might ruin your home or damage the furniture and structure. You’re still in charge of the home so it is your responsibility to deal with repairs, but your tenants will be liable for any malicious or accidental damage caused.
While it is considered “passive” income, you still have to look for renters, list your property and contact repairmen to fix the property in case something breaks or needs maintenance. As a result, you might be working more than you hoped but those situations only apply for the start of a rental contract. Once you’ve secured some tenants, you won’t need to worry about much besides receiving phone calls to fix repairs.
Another popular option is to focus on peer to peer lending. You simply register, browse a couple of loans that you think will work, then invest in those individuals who want to borrow money. When the individual repays their monthly instalments, it’s credited directly to your account and the service you use gets a small cut.
You’re essentially lending people money and getting a better interest rate than you would with a bank, and the person that borrows your money pays back less interest than if they were to borrow from a bank. You’re cutting out the bank when it comes to investing and instead, you’re using a middleman to manage the money and handle the services.
Unfortunately, those with low credit rating scores won’t be able to benefit from lower interest rates than using a bank. However, there is no minimum loan amount so even if you have a small amount of money to invest, you can still contribute and start making a passive income.