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Passive Income Options

16,719 Views | 62 Replies | Last: 3 yr ago by Stumpknocker
Andromeda
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Sock time.... since apparently more here know me than I thought.

Had a question regarding passive income. Specifically I want to look into what some of the better options are to start generating some. I'm married and currently max out my 401k with 3% company match, and we also max out our Roth IRA's every year. I've got a mix RSU's and bonuses paid out periodically... And we've got $500-1000/month that we put away into a brokerage account which primarily contains stock and mutual fund investments.

My question is.... what else can we do start generating more passive income? I've been intrigued by real estate crowdsourcing and/or P2P lending as an option, but I'm not sold just yet. Have also thought about tangible real estate ownership (rental properties) but also not sold there because I'm not sure I want to deal with the hassles.

What other options would you recommend?

TIA
IrishTxAggie
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AG
I would highly advise against the real estate crowd sourcing. The terms are awful and you'll either never see a return or it will be minuscule.

I haven't yet, but several on her have done the P2P lending on lending tree and seem to do pretty well with returns ranging from 8-15%, but that carries risk too because they're unsecured loans.
diehard03
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Quote:

I'm married and currently max out my 401k with 3% company match, and we also max out our Roth IRA's every year. I've got a mix RSU's and bonuses paid out periodically... And we've got $500-1000/month that we put away into a brokerage account which primarily contains stock and mutual fund investments

I think it's safe to say that you're already on the path to being a multimillionaire (without knowing your age/current state). I would probably assess why you think your current plan is not working.
BlackGoldAg2011
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AG
just a thought, but some of the hassles of tangible real estate investing could be mitigated by hiring a management company to handle the rental work for you. it will cut into profits though so will need to be balanced against what your market will support in rent vs how much you will be paying on the property. but depending on how quickly you need passive income, this route could be low income generating now, but building equity (low tax burden) and transition to higher income and lower equity later on in the life, when your income tax burden has gone down in other areas.
WestTxAg16
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AG
Dividend stocks, side hustle of any sorts, intellectual property, credit card hacks, etc.

RE investing is definitely an option. Check out Bigger Pockets if this really is something you are interested in. They have forums, blogs, and 2 podcasts (one on RE and one just money in general that is newer). Lots of knowledgeable people on BP. If you can find a good deal, you can get property managers for ~10% of rent and still cash flow, build equity, and benefit from any appreciation the house sees. Plus there are tax benefits.
bjork
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IrishTxAggie said:

I would highly advise against the real estate crowd sourcing. The terms are awful and you'll either never see a return or it will be minuscule.
Who have you invested with?

White Coat Investor had a large article on them a few years ago. I plan to explore them when I hit accreditation status.
smucket
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AG
I mentioned this on another thread - I recently joined the High Dividend Opportunity group on SeekingAlpha. Here's an article about it:

https://seekingalpha.com/instablog/839737-j-mintzmyer/4986810-recommended-community-dividend-investors-and-retirement

I think it costs around $500/yr to join. The leaders of the group do a great job, I think, evaluating, analyzing, and scrutinizing various income producing securities (CEFs, Income ETFs, MLPs, REITs, Baby bonds, etc) and give you some really great tools (a completely thorough list of securities recommended, all the relevant stats, at what price point to buy, etc) and a portfolio tracker which gives you real time info on your portfolio valuation and the income stream it is producing.

Now they are not perfect, some of their recommendations I have taken with a grain of salt and passed on. And their are still other stocks and securities that I like but they don't mention. They do give solid reasons for both entry and exit into the securities they recommend. I'm using them plus a few other sources, like barchart.com for technicals, to make investment decisions on about 1/4 of my portfolio. IOW, I don't put all my eggs in one basket, but try to rely on those who do a lot of homework.
I travelled in America, but instead of romantically and directly rubbing the snakeskin of my body against the asperities of its terrain, I preferred to peel protected within the armour of the gleaming black crustacean of a Cadillac
-Dali
IrishTxAggie
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I haven't. Every time I came across something that piqued my interest, the fine print was an absolute killer and nonstarter based on returns before they began to payout.
mwp02ag
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I've hwlped fund 3 deals via Texas Quest Capital with my SDIRA. 11% annualized returns with limited risks as these are 70% ARV deals meaning the loan covers the purchase and renovation cost up to 70% of the renovated value of the home ie there will be 30% equity in the deal. They also hold 4 month of interest payments in escrow meaning no chance of default until month 5. You'll recieve monthly interest payments for the 12 month term (unless paid off sooner) and 1 point on the back.

I've also BRRRRed a triplex with a loan from them. Real sweethearts and they helped me keep trucking when they could have taken the home from me when I screwed up and went too long.
Andromeda
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diehard03 said:

Quote:

I'm married and currently max out my 401k with 3% company match, and we also max out our Roth IRA's every year. I've got a mix RSU's and bonuses paid out periodically... And we've got $500-1000/month that we put away into a brokerage account which primarily contains stock and mutual fund investments

I think it's safe to say that you're already on the path to being a multimillionaire (without knowing your age/current state). I would probably assess why you think your current plan is not working.

For frame of reference.... around 40 in age. In Texas. Yes, currently on track to multimillionaire status so far.

It's not that my current plan isn't working. Just interested in generating additional passive income where I can. more... More.... MORE! (kidding).

diehard03
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Quote:

It's not that my current plan isn't working. Just interested in generating additional passive income where I can. more... More.... MORE! (kidding).

But why? What has you convinced that this "passive income" is the way to go? Why not just keep your current investment plan, which is rather passive already?
Andromeda
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Cause I'm a red-blooded 'Merican and I want to. Next question.
mwp02ag
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AG
diehard03 said:

Quote:

It's not that my current plan isn't working. Just interested in generating additional passive income where I can. more... More.... MORE! (kidding).

But why? What has you convinced that this "passive income" is the way to go? Why not just keep your current investment plan, which is rather passive already?
I'm unemployable and I understand that time is my most precious asset. I could no longer work for other peoples dreams while my time was wasted away from my family and the travel we want. Instead I've poured myself into understanding how own thousands of doors that provide cash flow.

The circles I am moving into have all become completely financially free, they all spend their time doing exactly what the want to and never have to punch a clock or ask for time off. Hell one of my friends started 6 years ago with just a couple of single family and duplexes and a job at EY. He now is a partner in a private equity group and raised $11 million in two days to buy another complex. He now controls over 3000 doors, all by raising money and not risking his.
diehard03
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Quote:

Cause I'm a red-blooded 'Merican and I want to. Next question.

Why risk a surefire multi-million dollar path for no reason? You're not dumb - everything that generates more return carries more risk and will require much more concentration to mitigate that risk.

if that's your jam, go for it.
Andromeda
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I'm not sure where your contention that I'm risking everything is coming from.

All the things we are currently doing, we will continue to do. At no point did I say we wanted to completely alter our investment strategy or retirement planning. I explicitly asked "what else" can we do to generate additional passive income.

And I'm well aware that more reward means more risk.

If you've got some ideas on the matter, would love to hear 'em.
diehard03
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Quote:

I'm unemployable and I understand that time is my most precious asset. I could no longer work for other peoples dreams while my time was wasted away from my family and the travel we want. Instead I've poured myself into understanding how own thousands of doors that provide cash flow.

The circles I am moving into have all become completely financially free, they all spend their time doing exactly what the want to and never have to punch a clock or ask for time off. Hell one of my friends started 6 years ago with just a couple of single family and duplexes and a job at EY. He now is a partner in a private equity group and raised $11 million in two days to buy another complex. He now controls over 3000 doors, all by raising money and not risking his.

These things always make me giggle. You will never work harder or longer hours than as "your own boss". Full stop. I don't know a single "unemployable" person who spends all their time at home and travels constantly under the age of 50....and those that are under the traditional retirement age paid dearly for it.

it sounds like you are following the "leverage everything out of your ass" approach...which is fine if that's your thing. Just don't be blinded by survivorship bias and only see the 1 person who makes it and not the 99 thousand that lose everything: money, family, life.
94chem
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Andromeda said:

Sock time.... since apparently more here know me than I thought.

Had a question regarding passive income. Specifically I want to look into what some of the better options are to start generating some. I'm married and currently max out my 401k with 3% company match, and we also max out our Roth IRA's every year. I've got a mix RSU's and bonuses paid out periodically... And we've got $500-1000/month that we put away into a brokerage account which primarily contains stock and mutual fund investments.

My question is.... what else can we do start generating more passive income? I've been intrigued by real estate crowdsourcing and/or P2P lending as an option, but I'm not sold just yet. Have also thought about tangible real estate ownership (rental properties) but also not sold there because I'm not sure I want to deal with the hassles.

What other options would you recommend?

TIA
Have a kid or two and forget about the brokerage account. Problem solved.
Andromeda
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Already checked the box on having kids.
Ragoo
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AG
Your thread title says it all. Sell option spreads.
chris1515
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https://www.wsj.com/articles/u-s-pursues-one-of-the-biggest-mortgage-fraud-probes-since-the-financial-crisis-1534357872

Be cautious in chasing after some of that passive income...
bmks270
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I like ETFs.... super passive. Just need to do research and some analysis then go in.

The real estate thing is not passive. You have to do a lot of work or have to hire managers that lower profits. You also must be leveraged to get high returns.
mwp02ag
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I opened my first small business, a gym, in 2015. I became self employed later the same year as a real estate inspector. We opened a second LLC in 2016 for REI.

You're right, we do sacrifice dearly in the near term. It is costly but as our businesses have become adolescents, we've realized that we've taken them as far as we can without help. We're getting big, we've hired coaching/mentoring for the gym and the REI is next. A couple more years of struggle to implement procedures and it will begin to shift the other way, towards more time with family and friends.

I don't look at work the same as I did before. I love what I do. I love coaching and Inreally love real estate. My perfect day is coaching am classes two days a week, splitting them with my wife. We have breakfast at home together 4 days a week. She is working on her RE license and we love to work toghter, it's made us stronger than I've ever imagined, a team.

Yes I believe in leverage but I do have rules and they have served me, and the people I learn from, well. Many of them lost everything in 2008, and won't make the same mistakes again. It must be respected, but if you want to grow your "passive" income, leveraged real estate is one of the best ways I've learned. It makes sense to me.

I don't mean to make it seem as if I won't be working my ass off but it just doesn't feel like work. It's fun. Plus we get to travel on both businesses all the time, it's easy to get a trip paid for if you'll coach a couple boot camp or yoga classes in the morning. Belieze has some great deals we plan on touring next year.

I'm living my dream and the best is yet to come.
aggiebq03+
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I'm surprised how many people think "passive income" = not a corporate job.

To me passive income would be something that requires no work on my part at all, other than maybe a few hours all year.
mwp02ag
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AG


Explanation of The Cash Flow Qaudrant

This is how I look at how money works. There is no truly passive income in my opinion, but getting to the right side of the quadrant should be the goal.
aggiebq03+
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Yes but this thread isn't about self employment or owning a business. Its about taking extra cash from a job and investing it. So that chart is pointless for this thread.
mwp02ag
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You're correct and I am not trying to derail. I am trying to say that REI is a business that can provide passive income. If a person wants to supplement W2 income with passive, opening a LLC for REI is IMHO one of the best ways to do so. I'll move along.
Andromeda
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Well... my definition of passive income is relatively simplistic I suppose. It's basically having my money make more money for me, the general idea of which is captured by the chart above. I'm already invested in stocks/mutual funds and would like to look in other areas.

Real Estate has been mentioned in this thread and is an example of something falling into the lower right quadrant of the chart. So let's hone in on that possibility.

I'm not passionate about owning rental property at this point, but will consider. What do y'all think about real estate crowdfunding? Pros / Cons? Also... are there other ways to get into the real estate game (invest) without actually owning individual smaller properties (i.e. rental) and still generate income?

Thanks..... Would like to turn this into a useful thread for many if possible.

aggiebq03+
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I appreciate the thread any anyone posting in it. I'm also interested in passive income outside of buy and hold mutual funds and bond funds, which is why I was trying to put a definition around what passive income would mean. I don't have time to spend other than maybe 1 hour a week, which is what passive would mean for me. If it's not aligned with what you meant I'll bow out and start another thread some time.

Looking into it previously the only passive real estate investment would be and REIT. But I'd love to hear of something else.

As always, enjoy reading on the B&I board. A lot of smart people here. Now back to lurking...
davido
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Small commercial may be an option. Good location, low vacancy, higher cost, lower returns. But it could be nearly auto pilot with 3-year leases. Could self manage or turn it over, just part of the math.

The other option would likely be getting in with local/regional investment or private equity groups. Something where you can actually have a relationship with who's handling the money, and know the specifics on each deal (invest/pass).

I'm more a fan of hands on, better returns. But that will likely fade as I age.
mwp02ag
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I am looking to invest with a group like Reep Equity in a completely passive apartment syndication with my SDIRA next. Typically need $50-100k and many of these groups only work with accredited investors but Reep does not require you to be accredited.
Bmac832
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@mwp02ag Any updates with REEP Equity? Would love to chat to you about this further as I am in a similar boat. Brianamckinstry at yahoo dot com

PPAag06
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AG
I'll be in the same boat come Jan 1. I am maxed out on non-accredited investments right now. If anything can be shared publicly i would appreciate it.
South Platte
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mwp, I can't figure out whether to give you the middle finger or listen to you. All of your "thumbs up" posts makes me think you are a used car salesman, but you make good observations in many of your posts. I've got one condo that rents like a mofo, but looking to get into small community rental housing. However, I can't seem to get my friends who know those small communities inside and out (but do not invest in real estate) l to partner up with me.
jaggiemaggie
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I'm in the same boat... I have several friends who keeps talking about wanting to invest in real estate then I suggest we all get in together to have more buying power but apparently it's all just "cooler talk" for them. As for me, I've been stuck in the paralysis by analysis state and honestly just don't know how to get started.

Anyone interested in a TexAgs Houston REI meeting up? Would love to meet some REI folks in Houston and network....
mwp02ag
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Hahahaahaha, no star's limits me to just the very basic of emoticon with which to relay my "i'm not looking for a fight, just a discussion here" attitude. I'm a shy guy and it's not easy for me to come on here, a recent but growing investor and share what I've learned. It helps me to share and discuss these ideas and I am very much into the goal of passive income through multiple streams.

My experience is limited but I am ACTIVELY working to grow my real estate investments and I see no reason to go the traditional route of discovery through a multitude of SFR rentals forsaking getting into bigger deals. I've had one SFR rental, I bought a vacant and distressed 1900's triplex and completely restored it and it's now a cash flow asset with great equity. Now I want to play with some big boys in apartments so that I can learn from them.

If you're interested in Reep, just put your information in the website and they will be in touch. I've not put any funds with them yet, but I will next deal they get along.
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