The Value of Passive Income

Are you looking for ways to make passive income work for you but don’t know where to start? It’s natural to feel doubtful and even fearful when it comes to passive income. After all, it requires a significant investment, entails risk, and often has uncertain returns.

It’s no wonder that passive income has always been a contentious subject. It isn’t a subject that’s taught in most schools while many well-intentioned people will counsel us to stay away and warn us that it’s a fast way to lose good money.

What many fail to realize is that when done right passive income is a great way to create financial security, stability, and freedom. Since passive income isn’t restricted by how much time we can put in or how much work we can do, succeeding at creating passive income streams empowers us to build wealth with minimal effort.

In this article, we talk about different opportunities for building passive income, but before we do that, let’s agree on what passive income is.

What is Passive Income?

When we talk about passive income, we’re referring to income generated from a business investment where the earner does not have to materially participate. You can work your regular 9 to 5 job, study, do your chores, and continue to live your life without dedicating a huge chunk of your time towards your investment.

If your investment generates sufficient returns, you can even put your corporate job in the backseat and live off your earnings. Passive income gives you financial freedom— the freedom to pursue what you want when you want. You don’t have to worry about how to put food on the table or how to pay for your kids’ tuition.

Sounds like a sweet deal, doesn’t it?

Sources of Passive Income

If you want to build passive income for yourself and your future, here are some ideas to get you started.

Real Estate Investment Trusts

Don’t have the time, funds, or energy to invest in real estate? That’s fine! Try your hand at real estate investment trusts or REITs.

REITs are investment vehicles that own and manage income-generating properties. They offer a whopping 90% of their taxable income as generous dividends to their investors and work according to the stock market. This means there will be fluctuations in your investment value.

As an owner, you’ll earn from the properties that are rented, leased, and sold. Of course, you’ll also share the losses.

Rental Properties

If REITs aren’t your cup of tea, there are other opportunities for building passive income.

Rental properties can generate a healthy flow of income even when you outsource their management and repairs.

One of the best ways to profit from a rental property is to purchase one that doesn’t need repairs and can accommodate tenants right away. These types of properties are usually referred to as “turnkey properties.”

They help investors, particularly those who are looking for short-term profitable ventures, avoid the renovation process and start earning right away.

Real Estate Crowdfunding

Another way you can earn from real estate is by being a limited partner in commercial property like offices and warehouses. Called “real estate crowdfunding,” this type of investment pools together money from different investors so they can purchase vetted properties that can be sold at a higher value or leased out.

However, there are also financial investments that combine real estate crowdfunding with REITs.

Without real estate crowdfunding, an individual commercial property investor would have to spend upwards of $100,000, but with crowdfunding, interested parties can participate for as little as $5,000. Many real estate crowdfunding opportunities are available to accredited investors only through online platforms that are enabled by fintech solutions.

If you’re a private investor looking to invest in this type of investment, you should look for real estate crowdfunding opportunities that are open to non-accredited individuals.

Affiliate Marketing

Affiliate marketing is all about promoting a product through blogs, YouTube videos, buying guides, unboxing videos, product reviews, etc. When someone uses a code you provided or taps on an affiliate link from your site to buy a product or service, you earn a commission.

However, be warned that affiliate marketing can be time-consuming at the beginning. You’ll have to research a lot of brands and see if they resonate with your audience before you can start making money.

Dividend Stock Investing

Dividend stock investing is a type of stock investing strategy that relies on buying stocks from companies that are in the habit of paying out dividends or earnings to their shareholders.

This entails identifying which stocks pay regular and generous dividends, evaluating the company’s earning capabilities, and deciding how much stock you want to buy. Of course, you’re also at risk if the company decides to stop paying dividends or reduces the pay-out due to management decisions and adverse economic conditions.

Peer-to-Peer Lending

Peer-to-peer lending allows investors to loan a certain amount of money to borrowers and charge interest on it until it’s paid in full. They’re particularly popular among borrowers who don’t qualify for traditional loans.

However, it comes with its share of risks such as bad debts that go into default, the lending platform losing money or shutting down, and not having sufficient diversification.

High Yield Savings Account

Want to play it safe and do away with risk? If so, a high-yield savings account may be the right investment option. To participate, all you have to do is open a high yield savings account and deposit your money. They offer higher annual percentage yields than traditional bank accounts but they’re still covered by the FDIC or the Federal Deposit Insurance Corporation so your deposit is protected by up to $250,000 per bank.

The interest may not be as great as other investment opportunities but the low risk is certainly an advantage.

The Bottom Line

While there are numerous investment opportunities, some of the best ones are a combination of the ones we mentioned above. A great example is dividend stocks that are REIT-based and may also rely on crowdfunding. This type of investment allows you to earn through the pay-out of dividends.

When it comes to investing, be sure to explore all the options at your disposal. What works for your neighbor may not work for you. We all have different inclinations, risk appetites, and investment goals so you should always do your homework and check if an opportunity will work for you regardless of how promising an investment opportunity seems.

Andy Schmidt

Andy has been in the online content world for over 10 years as a freelance copywriter, technical writer and translator, covering different topics – finance, energy, and also sustainability. What is he doing when not writing? Andy learned how to enjoy long walks, play chess, and finally – how to sleep at night.

SW Manager, LLC (“Manager”) is a wholly-owned subsidiary of and controlled by Tryperion Holdings, LLC (our “Sponsor”). Manager is the external manager and advisor of 1st Streit Office Inc. (“1st Streit Office”) and 1st Streit Office Operating Partnership LP (our “Operating Partnership” and, together with 1st Streit Office, “Our Current Offering”). 1st Streit Office is the sole general partner of our Operating Partnership, through which all of our assets will be owned and substantially all of our operations will be conducted. All references herein to “Streitwise” refer, as applicable, to Manager, 1st Streit Office, the Operating Partnership, or any of their affiliates (collectively, the “Streitwise Entities”). Unless explicitly stated to the contrary, all references to “we,” “us,” and/or “our” shall refer to the Streitwise Entities. By using Streitwise, you accept our Terms of Service and Privacy Policy.

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¹ Dividends & returns: Current annualized dividend based on the most recent dividend declaration as of the quarter ending 3/31/2024. Dividend return calculations based on NAV at the time of dividend return. 1Q24 dividend payout of $0.11/share equates to a 6.2% dividend based on the current NAV. The REIT has averaged a 7.2% annualized return since 2020 and a 8.3% annualized return since 2017 based on the average NAV for the respective periods. See Quarterly Report for all returns history.
² Source: FTSE NAREIT All Equity REITs vs S&P 500.
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