Asked by Michael  |  Submitted August 26, 2014

Any ideas on sources of passive income?

I use to have a few rental properties but didn't enjoy doing that too much because of having to deal with bad tenants. I was wondering what other options I have in today's market.

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  Answers  |  5

August 26, 2014

Passive activities by definition are those trade or business activities where you don't materially participate. Rental real estate is one type, especially if one uses a management company. Another type would be limited partnership interests. Your question is very broad, and perhaps you have large passive loss carry-forwards you are attempting to use. In any event, I would suggest that you find a CFP(R) professional who also is involved with tax work. This individual may be able to offer guidance for your unique situation. Good luck.

$commenter.renderDisplayableName() | 09.23.17 @ 21:59

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September 02, 2014

Michael, there are many passive options for real estate investments that will relieve you from the 3 terrible T's (Tenants, Termites and Toilets). If you have a taxable gain that you would like to avoid then an appropriate 1031 exchange can be arranged to this solution for you. Make sure that you are working with a qualified financial advisor to look at your whole picture before proceeding.

$commenter.renderDisplayableName() | 09.23.17 @ 21:59

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November 18, 2014

Buy rental property in university markets. In Virginia, you can advertise " graduate students preferred". You can also have parents cosign the lease as a hedge against late or non-payments by students. I have great students now who are so happy with my rental that they may stay in my rental after undergraduate graduation and go to grad school at the same university.

$commenter.renderDisplayableName() | 09.23.17 @ 21:59

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July 30, 2015

I also own rental properties and agree that they are definitely not passive. Even if you have a property manager it's not a completely passive activity. You could also start a small business build it up and get someone to run it. Much easier said than done and still not 100% passive. The best passive investment I can think of is a portfolio of diversified stocks. Once you set it up you can get 3-4% annual dividends with very little work. If you can save up a million dollars that's $40k a year without lifting a finger. Once interest rates kick up you should be able to get even more than that. In the end there is no completely passive activity. So is life...

$commenter.renderDisplayableName() | 09.23.17 @ 21:59

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May 24, 2016

Depending on your age and principal amount an Annuity is the definition of passive income. If you use the correct annuity, and set the annuity up correctly, you are looking at 100% guaranteed payments for life. Even if your principal drops to $0... You still get your full payments.

$commenter.renderDisplayableName() | 09.23.17 @ 21:59

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