I wanted to share this with the ATS community because we seem to have a great variety of individuals on here, some who own their own businesses or who
have in the past, many of us who work for others as a source or income, retired individuals, people who are otherwise out of the workforce, and then
a mixed batch of members who do not fit neatly into one of those categories.
I've been diligently researching ways to earn extra income so that I can prepare to be a homeowner sometime in the next few years. I've been a
renter for over a decade, and in that time I could have been building equity in a home, but there are of course barriers to entering the real estate
market (I was mobile for a few years and lived in more than 5 different states in as many years).
Now it seems I may be "settling down" in one place, and I don't want to keep paying more than half of my income on rent (it is absurdly expensive
where I live, and getting more costly as time goes on).
To cut to the chase, I've recently been looking into a number of new(er) opportunities that some people have found success in. My goal is to create
at least one additional source of income, and in the future have a sort of "passive" income stream that can supplement my primary source of income.
I'm not a financial advisor and am not seeking professional advice on ATS
. I am
, however hoping to ignite a conversation for anyone
else who is interested in this subject, or has personal insights they could share with the rest of us.
The 3 topics I'm opening up the conversation with are: 1) REITs (Real Estate Investment Trusts), 2) Peer-to-peer Lending, and 3) Dropshipping.
Keep in mind, any of these options will take money to make money. However, for me personally, I'm hoping to establish something that will pay future
dividends and allow me to leverage my money. To me, that is more valuable (even if it is taking on a moderate level of risk) than sitting in cash.
If you have other ideas for creating passive/supplementary income streams, please also share your thoughts or experience with those since it could add
value to the discussion.
What's a REIT?
REITs allow anyone to invest in portfolios of real estate assets the same way they invest in other industries – through the purchase of individual
company stock or through a mutual fund or exchange traded fund (ETF). The stockholders of a REIT earn a share of the income produced through real
estate investment – without actually having to go out and buy, manage or finance property.
REITs sound like a financial product, much like a lot of other crap in the equity markets. However the idea
behind what REITs are and how they
work seem to be a fitting topic for the purposes of this conversation. Does anyone have any experience with these or know anyone who has? It's a
long shot, but I thought it worth including.
Institutional investors have consistently outperformed public markets over the last 20 years by investing in alternative assets like private market
real estate. Fundrise democratizes access to this once-unattainable asset class, making it possible for anyone to become a real estate investor
regardless of income or net worth.
Fundrise sounds like a similar idea to REITs, but perhaps there's something I'm not understanding. There is a minimum investment of $500 for
Fundrise. Honestly I need to spend more time looking into this one since I don't fully understand the A-Z yet. A simple youtube video or 2 would
probably suffice though. If anyone has heard of Fundrise I'd love to hear your thoughts. Moving on to...
LendingClub (Peer-to-Peer Lending)
Investors: In exchange for competitive returns, investors purchase Notes, which correspond to fractions of loans.
LendingClub: LendingClub screens borrowers, facilitates the transaction, and services the loans.
Borrowers: Borrowers use loans to consolidate debt, improve their homes, finance major purchases, and more.
Again, it will take money to make money if you are going to get into P2P lending, and there is risk that the borrower could default (I'm not sure
what protections, if any there are in case that happens). I am certain there are other options than just LendingClub but this was one of the first
ones that popped up when I was researching P2P. A fitting option to include in our discussion. Lastly, let's look at dropshipping:
Dropshipping is a retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it
purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.
The biggest difference between dropshipping and the standard retail model is that the selling merchant doesn't stock or own inventory. Instead, the
merchant purchases inventory as needed from a third party – usually a wholesaler or manufacturer – to fulfill orders.
For this one, you would need some sort of a marketplace so that you are acting like the "store". For me, dropshipping sounds like the least likely
option for me, just beginning on this journey to identify additional income streams. But down the road, who knows?
I look forward to hearing from folks, even if they have absolutely no experience in these types of investments/income streams. Perhaps you have your
own innovative service that provides you with income. Have you bought residential buildings and rented them out to others? What was your experience,
biggest challenges, learning moments? I'd love to learn more!
Are also interested in looking into building passive income. Whatever the case, I hope we can get an informative conversation started and find some
benefit in this discussion.
Thanks in advance and looking forward to hearing what folks have to say.