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Smart Passive Income Ideas & How To Kick Off Your Initial Financing

17 January 2018 No Comment

Passive income refers to funds that don’t need much effort on your part. It’s different from active income where you actually render a service for a corresponding amount (e.g. salary and bonuses). Simply put, you can continue to earn money while you sleep without giving up your employment or your business.

Here are some ideas to boost your assets and liquidity:

  • Rent a Room – Turn an extra room into an asset by putting it up for rent. More and more people are renting now more than ever, and you help plug the gap. You may need initial capital to refurbish the space and make it more attractive to renters but it a good passive income career.
  • Invest in Properties – Property rentals has been providing passive income for investors and property management companies over the last 100 years. Whether your sector of the real estate market is residential or commercial, the consistent passive income generated by property rentals will provide you and your loved ones with stability and piece of mind. Of course, property management is not an easy job and you have to deal with a lot of Federal regulations. Be sure to do your research.
  • Affiliate Marketing and Networking – Affiliate marketing lets you promote products from third party companies while you get paid for the referrals or online sales. This is a great way to mke passive income while you sleep. This may require initial effort and capital as you build your network.
  • Peer-to-peer Lending – There are lending clubs you can join where your money can earn big interest compared to just letting it sit in the bank or investing in government bonds or securities. The downside is the high risk when the borrowers are in default.
  • Stock Trading – Another passive income is to invest in stocks. If numbers interest you, then you will find time to study how it works. It’s not as complicated as you may think. However, you can also work with a trading company to handle your account.
  • Cryptocurrency – Bitcoins is all the rave right now. Cryptocurrency trading works much like stock trading. There’s a learning curve involved, apart from the risks associated with a very volatile product. Bitcoin (US$15,000) and litecoin ($237) are still an unknown commodity, despite its popularity.
  • Crowdfunded eREITs – You can invest in a real estate investment trust (REIT) company, which will then finance property projects. Online eREIT was pioneered by Fundrise and many other online crowdsourcing REITs soon followed, such as Realty Shares, for instance.
  • Vending Machines – A vending machine placed in an ideal location will earn about $100-300 each month if they are placed in strategic locations. Although that may not be enough, this could yield high returns if you have a sufficient number of units.
  • Franchising – Compared to vending machines, franchising offers higher yield potential. You follow a successful business model so you don’t reinvent the wheel. You also let somebody else manage the business so you are not involved in the day-to-day operations. At the outset, there’s a lot of research involved to make sure you are investing in the right franchise.

 

Passive income, however, may need initial funding. The main question on your mind right now is:

How to Kick off Your Initial Capital?

Ideally, family members and relatives who are willing to lend you money without collateral and interest would be the preferred route. However, if you have no rich relatives just waiting on wings, it’s time to consider two options:

  1. Asset-Based Lending. This basically refers to a loan that is backed up by collateral. Financing institutions and commercial lenders extend the line of credit to any businesses or individual if they can offer an asset (land or property title, marketable securities, equipment, finished inventory, etc.) to secure the loan. You may get from 50% to as much as 90% of the value of the asset. You can renew the loan as often as you can after you have paid up the balance.
  2. Accounts Receivable and Purchase Order Financing. Accounts receivable is another way to raise capital to grow your business or settle some obligations. In this case, you offer your outstanding invoices at less the face value to a factoring company. You get quick cash and then shed off the risk on the collection, and you can use the money any which way you want as long as it is for business purposes.

In contrast, a purchase order is limited by its use. You can only use the quick cash flow in order to fulfill the terms of the PO. You can think of this as a cash advance so you can settle your obligations for an ordered product or service. The interests and processing fees (which is typically between 1-10% of the loan value) will differ depending on the lender.

With these passive income ideas, you should be able to take two actions:

  • Find a platforms and tools that fits one of our passive income ideas for you to start up.
  • Reinvent the wheel and come up with a whole new concept for passive income ideas that works for you.

No matter the choice, the end goal is the same, passive income that provides security and piece of mind for you and your loved ones. Thank you for taking the time to contribute to this article. We would love to know your passive income ideas that other readers can gain from.

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