Skip Real Estate: Put Your Down Payment in These 7 Investments Instead for Passive Income
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Martin Dasko
5 min read
Real estate is often considered a top contender when exploring passive income streams. However, it’s crucial to note that being a landlord doesn’t always equate to passive income. The reality is that managing a property comes with its fair share of challenges. From the difficult task of finding a tenant to dealing with potential issues that may arise, you can’t forget about the numerous expenses that need to be covered.
You may realize that after you factor in your time and the expenses, real estate isn’t even that substantial of an income source. The income can also be far from passive because plenty of work may be involved. If you have a down payment saved up for the rental property, there are better options for this money to help you earn money in your sleep.
Here are investments that can earn passive income without the expense of a mortgage and the hassle of maintaining a rental property.
“Dividend stocks are the easiest way to generate passive income because they offer a lot of liquidity and are well-regulated,” said Jim Wang, founder of Wallet Hacks. “This also helps you avoid scams.”
Investing in dividend-paying stocks means you don’t have to worry about dealing with tenants or handling issues. Companies pay dividends to shareholders to share in profits, and you simply purchase your stock through an online broker. Since the stock market is regulated, you don’t have to worry about collecting rent from a tenant or dealing with repairs.
“By investing in solid companies, you become a silent partner and earn a portion of their profits without active involvement,” added Kraig Kleeman, founder and CEO of Z-Branding. “This is a much smoother and less stressful investment option compared to the ups and downs of the real estate market.”
The goal is to conduct your research to find reliable companies with a history of paying a healthy dividend so that your funds will bring in passive income based on the terms.
Instead of spending your down payment on purchasing a physical property, you can invest in REITs.
You can earn rental income without any involvement with the properties. You don’t have to worry about screening tenants or managing units. These assets can be easily purchased online, and you don’t have to stress about any additional effort.
Selling Digital Products
You can invest in digital products that will bring passive income since you only have to create the product once. But how can you make passive income through digital products? Here are some options:
Sell digital printables on Etsy.
Sell digital books on Amazon.
Sell eBooks on Gumroad.
How can you invest your down payment into digital products?
Outsource the entire process (from formatting to design).
Pay for marketing assistance.
List your products on the different platforms.
Spend some money upfront on marketing and advertising campaigns.
You may have to invest time up front in this passive income stream by researching content before creating it. However, you can outsource much of the process and pay for help in the areas that you’re weak in.
Create an Online Class
“If you have skills people want, throw them into an online class,” said Kleeman. “Make turning your know-how into cash flow easy. Once it’s running, kick back and watch the money stroll in.”
You can sell a course on a platform like Teachable or Thinkific, where you’ll earn passive income after you’ve set everything up. You may have to invest time and money into creating the course, but once it begins to sell, you can be hands-off.
Affiliate Marketing
Affiliate marketing can be a passive income stream if you build up a blog or an audience on social media. While building yourself up may take some time, the compensation can be substantial if your audience supports you and what you’re promoting.
“Joining affiliate programs can be like making money while you nap,” noted Kleeman. “Stick affiliate links in your blog, socials, or wherever. When your audience buys through your links, you pocket a slice of the sales – an effortless way to cash in without lifting a finger.”
Automated Dropshipping
Dropshipping has become a popular income stream over the last few years because people have figured out how to automate their online stores. Once you set up your store, the work involved will be minimal while your shop generates sales.
“With dropshipping, you sell stuff without even touching it,” explained Kleeman. “Your online shop takes orders, and someone else handles the rest. Your only job? Spruce up and promote your online spot.”
Peer-to-Peer Lending
Platforms like LendingClub or Prosper let you loan money to people or businesses for an agreed upon rate. You can generate passive income by finding the right deals that will allow your money to work for you without the stress of dealing with tenants or a home breaking down.
Final Passive Income Considerations
“Real estate used to be the go-to for easy cash, but times are changing,” remarked Kleeman. “Intelligent folks are checking out other income streams that skip the property drama.”
The passive income stream you invest in will depend on your risk tolerance, the amount of time you have to dedicate, and the amount of money you’re willing to allocate.
For example, if you don’t want to dedicate much time or effort to this venture, you can invest in dividend-paying stocks. On the other hand, if you want to tap into your creative side, you can start selling digital products or work on creating your own Etsy shop.
The goal is to find a passive income stream that matches your preferences so that you can eventually earn money in your sleep — without worrying about being a landlord.
