I ran across the question posed in the headline of this article – What’s the ultimate passive income business? – while browsing an online forum the other day and it was fascinating to see how different people answered the query.
How would you answer?
I think almost all ambitious people search for passive income (income where you don’t have to do much or any work to bring it in) at one time or another during their lives. Sometimes it seems like an impossible dream and people just give up on the idea. Before I go any further, let me say that unless you’re receiving trust fund money, I don’t know if true 100-percent passive income exists. At the very least, every source of income requires decision making and some planning, but I think you get the idea.
Answers on this forum varied widely. Here are a few with my observations:
– E-commerce. (If you’ve tried selling online, you know that you can’t be passive about it!)
– Forex market trading. (If you take a passive approach to trading currencies, you’ll be broke in about two days.)
– Multi-level marketing. (Try recruiting and keeping the people required to be in your sales network and you’ll experience the exact opposite of passive.)
The two answers to this question that were mentioned a few times and do come close to passive income were:
– Real estate, and
– Lending money.
As you probably realize, these are the areas where we specialize at Evoque Lending. Let’s look at each of these in terms of how “passive” they are.
Passive income from real estate
Receiving passive income from real estate is probably the closest way to enjoy true passive income. In the simplest terms: go buy a house, live it for many years, and sell it later after it has appreciated in value. All of that appreciation is passive income.
We help people get on this “passive income train” when they have been denied loans from banks and conventional lenders. Further, we work with real estate investors to help them add properties to their portfolios.
If you know anything about California real estate – and especially Los Angeles real estate, Orange County real estate and San Francisco real estate – you know that these real estate markets have been turning regular people into rich people through appreciation for generations.
Passive income from lending money
In the category of hard money lending, California investors have been making good incomes for a long time. And when it’s done properly, I’d say that it qualifies as a passive investment. If you lend someone $100 and he agrees to pay it back to you with an extra $25 in interest at a later date, it can’t get much more passive than that.
But frankly, if you have to do all the work of qualifying the borrower and collecting payments each month, I don’t think you can call it passive any more. That’s a lot of work and it’s extremely important and specialized.
I think the services we provide California hard money investors – screening applicants, establishing the true value of properties, and collecting and distributing payments – makes hard money investing a true passive income for our clients.
Finally, are you looking for an excellent passive income source? Buying California real estate and hard money lending on California real estate are probably your best strategies. And if you want to know more (including how we help make your investment safe) give me a call or drop me an email today.