Andrew Lisa
·4 min read
If you’re resolving to get in financial shape in 2024, your resolution probably involves bringing in more money. When crafting your strategy, remember that the best income is the kind you don’t have to work for.
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If you want a second income stream, you can either exchange your labor to earn it the hard way through a side hustle, or you can generate passive income that trickles in even while you sleep. Here’s a look at some off-the-beaten-path options for padding your paycheck in 2024 that you probably haven’t considered yet but should for a fruitful new year.
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Real Estate Debt Investments
If you’re interested in real estate, you probably know that rental income is one of the most reliable and lucrative forms of passive income. The problem is, it isn’t passive — even if you farm out most of the landlord-related grunt work to a property management company.
However, there are alternatives to owning physical property that can generate steady cash flow. “I’d encourage investors to look at property- or lien-secured debt investments,” said real estate investor Brian Davis, founder of SparkRental. “These could include funds or notes or funding individual loans.”
Those options might sound sophisticated, complex and out of your league, but there are platforms that make it simple. “For example, Groundfloor lets you invest in secured loans paying 7%-15% interest,” said Davis. “They’re also offering a great note right now at 10% interest with a one-year term. I’ve invested five figures in it personally. Another option out there is 7e Investments.”
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Private Equity Real Estate Investing (Yes, You Can Do It Too)
If investing in real estate debt secured by liens or property seems overwhelming, private equity probably feels even farther out of your wheelhouse. But here, too, ordinary investors can get in on the action without owning physical property or having the luxury of expert knowledge and mountains of cash.
“Investors should stop being intimidated by private equity real estate,” said Davis.
If you need a little nudge, just think of the passive income you stand to earn by taking the leap.
“Most target 15%-30% total returns and many of those investments include a 4%-10% income yield,” said Davis. “Beyond cash flow and appreciation, private equity real estate investments also come with full tax benefits. Granted, these come with high minimum investments of $50,000 to $100,000 if you invest by yourself, but you can go in with other investors.”
For example, Davis’ own real estate investment club, SparkRental, is dedicated to that exact concept, allowing members to buy into private equity deals for as little as $5,000 as part of group funding pools.
REITS and Dividend Stocks
Stocks and real estate funds that trade on the open market and distribute shareholder payouts are among the easiest, most accessible and most affordable paths to passive income.
“For 2024, I recommend exploring real estate investment trusts (REITs) and dividend-paying stocks as excellent passive income streams,” said Dennis Shirshikov, head of growth at real estate investing platform Awning. “These options provide exposure to real estate and stock market gains without the need for direct management or large capital outlay.”
The beauty of these investments is that — unlike traditional securities — you can draw cash from them without selling any shares, allowing your portfolio to appreciate while you collect periodic payments. “A client of mine diversified into REITs last year and saw a steady income flow that outperformed many traditional investments,” said Shirshikov.
Crypto Staking
Despite its growing familiarity, you probably aren’t invested in cryptocurrency. According to Pew Research Center, most Americans still aren’t confident in its stability and reliability — but they’ve likely based their assessment on stories they’ve heard about the misfortune of speculators.
“There are two ways to get involved in crypto — speculation and investment,” said Dr. Christopher Smithmyer, CEO and co-founder of Black Wallet Limited, a stablecoin 2.0 ecosystem management company. “Speculators are the fools who put all they have into the cryptocurrency market and ride the roller coaster. Investors have a crypto portfolio of about 5%-10% of their total portfolio. This portfolio is based on research, not just which dog is on the coin.”
Crypto offers a unique opportunity for investors to draw passive income through a process called staking. Instead of trading coins and tokens for profit or holding them in the hopes of appreciation, stakers lock a portion of their holdings for a set period to help support a proof-of-stake blockchain’s operation in exchange for a yield.
It’s kind of like the digital currency version of a CD — agree to lock up a portion of your assets for a while, and you’ll get them back plus interest in the near future. It’s certainly worth your consideration for passive income in 2024.
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This article originally appeared on GOBankingRates.com: 4 Passive Income Streams You Don’t Have Yet but Probably Should in 2024
