2020 is around the corner and once the holidays have passed, many people will be searching for ways to earn passive income in 2021.
If you’re new to this blog, or the concept of earning passive income, it’s an income stream that you set up once, then earn consistent cash flow from that initial work every month.
Keep in mind that some passive income streams may require a few hours per month of work but as long as you don’t spend more than four hours per month maintaining that income stream, it can still be classified as a passive income stream.
Any passive income stream that you spend more than four hours per month maintaining can be classified as an ‘active income’ stream. This means you’ve essentially created another job, so it’s important to make sure that you’re investing in a passive income stream that won’t require a lot of work.
Most people start in life with having one active income stream thanks to their jobs. This is to be expected, but the goal in life that everyone should have is to invest in businesses, or other income opportunities, that enable them to earn passive income, so they can live the life of their dreams.
Tips For Earning Passive Income In 2021
High Yield CD’s – Thanks to the internet, investing in high yield CD’s is easier than ever before because you can easily search for them from the comfort of your home.
Unlike many risky investments in the marketplace today, as long as the high yield CD that you invest in is backed by the FDIC, your principal is always going to be safe.
The only real risk with this type of investment is rising inflation but with the economy in the current shape that it’s in, I don’t think we will be seeing high inflation for at least another two years or longer.
Peer-To-Peer Lending – Another excellent way to earn passive income in 2021 is by peer-to-peer lending.
This is one of the oldest forms of lending known to man because people have always been loaning money to other people in some way for centuries.
Thankfully, in 2021, there are a variety of peer-to-peer websites that make it easy for you to become a lender (or borrower) safely and efficiently.
If you decide to become a lender, you will be able to earn passive income in the form of interest payments paid to you every month.
A word of warning though, as with any money that you may have loaned to a friend, or business associate in the past, this form of lending does come with the risk of default so proceed with caution.
Dividend Stocks – The stock market enjoyed crazy growth in 2020, despite the pandemic, and the good thing is that the growth doesn’t show any sign of slowing down.
What’s ideal about dividend stocks is that you earn them when the company that you’re invested in pays out dividends every quarter, based on company profits.
High-Interest Savings Accounts – You may be thinking ‘Savings accounts? Are you crazy?’ and the answer is no. You can earn money from a high interested savings account that’s backed by Bitcoin.
Real Estate Investment Trust (REIT) – This investment opportunity is an excellent way to get started with investing in real estate, without having to manage the property yourself.
REIT’s function the same way as dividend stocks since they pay out dividends to their shareholders every quarter.
A word of warning though, investing in REITs does come with risks, like stocks, so you must take your time verifying which real estate investment trust is the best before you choose to invest your hard-earned money with them.
Invest In Real Estate
Since this blog is dedicated to investing in real estate, especially multifamily rental properties, my preferred way to earn passive income in 2021 is by investing in real estate.
If you’re unsure about real estate, or you don’t have confidence in your ability to manage a property, no problem.
My suggestion is to start small by renting out a room in your home, or investing in a duplex, triplex, or fourplex and living in one of the units of that property.
Let’s say that you’re ready to invest in rental property though, my suggestion is to move forward and start searching for a multifamily property.
I am passionate about multifamily properties because it’s easier to scale a portfolio of multifamily properties, compared to single-family properties and it’s more cost-effective too.
More renters also want to live in multifamily properties, compared to single-family homes, so owning an apartment building or other multifamily property is ideal because you will always own an asset that’s in demand.
Where To Find Multifamily Properties:
- Networking with other real estate investors in your area. They might know of investors who own multi-family properties that may be considering selling them.
- Hire a Realtor® to help you search for properties. Local real estate agents have access to the Multiple Listing Service (MLS) and will save you the hassle of searching for properties yourself.
- Driving for dollars. If all else fails, decide on an area that you want to target, get into your vehicle and start canvassing that area until you find multifamily properties that may be for sale, or could be owned by owners who might be interested in selling.
Remember To Do Your Due Diligence
Once you find a multifamily property that you’re interested in buying, it’s important to do your due diligence.
What does this mean?
Due diligence means that you’re going to analyze the property thoroughly before submitting an offer on it.
Items to review – 12-month operating statement for the property, rent roll, real estate tax bills, and leases.
Talk with the tenants – Find out how the tenants feel about the property and if they like living there. You should also ask them what services they’ve been promised over the years and if the current owner has lived up to their expectations.
Get the units inspected – Hire an inspector to go through each unit to find out which ones need to be renovated, repaired, or both at the same time. Once you have a clear picture of the work that needs to be done, you will need to get contractor quotes to find out how much it will cost to get the property in rent-ready condition.
Comparable Analysis – After you know more about the property, you should analyze other multifamily properties in the area to find out what they are valued at / renting for / just so you can have confidence that the property is going to bring in consistent passive income in 2021.
Contact Trier Capital
At Trier Capital, we specialize in helping investors build profitable portfolios of multifamily properties.
Our company sources acquire and manage properties for our investors so that they don’t have to do any of the hard work themselves.
Rinse and repeat, rinse, and repeat. We make investing in multifamily properties easy.
To learn more about the benefits of investing in multifamily properties, or to speak with us about our program, contact me today by calling (630) 229-2383 or click here to connect with us online.