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i have to be honest , as well as i did in real estate over the last 25 years i would hardly ever call dealing with tenants and property passive income. it can be as active as any job.
even with a management company it is far from passive.
real estate is only passive until its not. once there are issues it is not passive anymore.
stocks, bonds, reits, commodities and gold never call at 2:00am and tell you the roofs leaking or the heats out.
i have to be honest , as well as i did in real estate over the last 25 years i would hardly ever call dealing with tenants and property passive income. it can be as active as any job.
even with a management company it is far from passive.
real estate is only passive until its not. once there are issues it is not passive anymore.
stocks, bonds, reits, commodities and gold never call at 2:00am and tell you the roofs leaking or the heats out.
But...
At the same cost of a house, those investments are not likely to return 1K every month.
One of my best investments (a utility) returns 5% a quarter and is trading right now at $50/share.
That is the (very rough) equvilent of a $100K house returning only 5K a year. With the added risk of losing principle.
It may not be the least work, but it might be the least work for the dollar.
It is rare any property will return 1k a month in the early years with a substaintial mortgage on it.
Gross or net?
You don't need a huge amount of money (assuming a cash-purchase here) to generate $1,000/mo in net rental income. Then again, you don't pay property taxes on stocks, don't have to pay for a new roof, carpets, painting, and the tenants don't move or have to be evicted with a stock. The cost of equities is usually pretty low even if cherry picking the highest cost funds.
living frugally is cutting expenses and improving cash flow . it is in no way increasing income.
lowering expenses is just that, an expense.
cutting expenses has a bottom when nothing else can be cut. increasing income can go on for ever.
they are two different things on two different sides of a balance sheet.
True, I just thought it was good if a person needs an extra $1k a month. So many of these other ideas seem to require you have money already or really aren't passive income. Guess I went with the assumption the Op is tight on cash and is looking for more. The Op doesn't have to take the advice if it's not wanted.
then you lose the biggest advantage of investing in real estate, other peoples money and leverage. it is the mortgage that allows an investor to take his resources and control big dollars with very little dollars .
if i paid cash for a property i may be able to buy one property , if i use a mortgage i can buy more than one.
any appreciation is multiplied many times now on my limited funds i put in.
heck , even if it is one properrty if i put 20k down on a 200k property and it goes up 5% i have 210k or a 50% gain. if i paid 200k cash than i have a 5% gain.
rule of thumb for investment real estate is have as little of your own money at risk or working for you as you can and use OPM..
the only time i use my own money is when it is a special situation . my partners and i bought out rent stabilized leases in central park co-ops so we could sell the apartments or we owned lease rights on commercial properties. these are things you can not get mortgages for so it had to be my own money.
but any other property i use very little of my own and use the banks and tenants money to pay for things.
Last edited by mathjak107; 04-08-2014 at 03:09 AM..
What is the fastest way to earn a monthly passive income of $1000?
Deposit 1.25 million dollars in a passbook account paying 1% interest.
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