This can be a little easier said than done, but if you have a large social media following, you can definitely earn money promoting a product or advertising for a company. You can even combine this with different marketing campaigns if you are an influencer and have your own blog (advertisement + affiliate income). This is how many bloggers make money! Again, it is not 100% passive but once set up correctly and then scaled, can be surprisingly lucrative.
If you know anything well, a place, how to fix something, how to make something, how to do something, you can write a guide for it. You can sell your guide as an e-book, offer it as a download for a fee on your site or reach out to bloggers with similar content and ask if they will offer it as a paid download on their website (for a price of course).
One of the biggest advantages of passive income is that it works when you aren’t working. The more passive the income, the less work that is involved at all. This appeals to my inherent laziness. But consider a high-powered surgeon. Sure, her hourly rate, while she is operating, is astronomical.  But as soon as she walks out of the OR, that income stream stops until she scrubs in again. Vacation? Not only is there no income stream, but there is likely a negative one due to overhead. When a passive earner is on vacation, that income stream, small as it may be in comparison to the surgeon, keeps right on working. Interest works both ways and as my kids know, interest should be something you get not something you pay. As J. Reuben Clark said nearly a century ago:
I’m a 45 year old business owner who also has focussed on diversifying my income streams. I have a short term vacation rental in Florida that I bought for $390k in 2012 and net rental income for the last three years has been growing steadily. 2015 I am at $70k gross right now but should end up at $80-85k with net around $45k plus we use the place about 35 nights a year.

As a general rule, the passive activity loss rules are applied at the individual level. Although Internal Revenue Code Section 469 was enacted to discourage abusive tax shelters, its impact extends far beyond shelters to virtually every business or rental activity whether reported on Schedules C, F, or E, as well as to flow through income and losses from partnerships, S- Corporations, and trusts. Generally, the law does not apply to regular C-Corporations although it does have limited application to closely held corporations.

Flynn has created many different products. While his LEED exam is what got him started, he has both earned a commission from selling other people’s products and offered a commission to others who would sell his wares, and also recently created his first software, SmartPodcastPlayer.com, after realizing that most online podcast players offered only the basic stop/start/volume features. He hired a development team to create a superior one, which was a success from day 1. “We sold out 250 beta licenses in less than 24 hours, because I was addressing a need but also, I had built up an audience and trust with them … When you build that amount of trust with your audience, whatever you come out with, they will love.”

The reality of the situation is that this client doesn’t use a property management company on the rentals. I felt it was stretch to say she was a real estate professional, because she is a physician.  However, before she got her job with the clinic, she did some side work at a hospital for a few months, but never met the limits of material or active participation.  
Additionally, if you wrote a book and receive royalty checks, that income is also passive and not subjected to self-employment taxes. But, if you write several books or make updates to an existing book (like this one) then you are materially participating in your activity and your income is earned income. And Yes, you would pay self-employment taxes on that income.
Oh it matters. It matters because accomplishing your goals depends on understanding these terms very clearly. What is the most common reason investors give as to why they are getting into real estate investing or why they are already in it? Financial freedom. Those who want financial freedom very clearly define that goal as being able to use real estate as a vehicle to eventually break loose of their current career and not have to work for their income. Okay, cool, a goal! And an amazing goal at that. Okay, so financial freedom, let’s talk about that.

This KB article is an excerpt from our book which is available in paperback from Amazon, as an eBook for Kindle and as a PDF from ClickBank. We used to publish with iTunes and Nook, but keeping up with two different formats was brutal. You can cruise through these KB articles, click on the fancy buttons below or visit our webpage which provides more information at-
You must file a written statement with your original income tax return for the tax year in which you regroup the activities. The statement must provide the names, addresses, and EINs, if applicable, for the activities that are being regrouped. If two or more activities are being regrouped into a single activity, the statement must contain a declaration that the regrouped activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. In addition, the statement must contain an explanation of the material change in the facts and circumstances that made the original grouping clearly inappropriate.
If you have a capital loss on the disposition of an interest in a passive activity, the loss may be limited. For individuals, your capital loss deduction is limited to the amount of your capital gains plus the lower of $3,000 ($1,500 in the case of a married individual filing a separate return) or the excess of your capital losses over capital gains. See Pub. 544 for more information.
The following post is a guest post from Anjali Jariwala, Founder of FIT Advisors. I began receiving a good number of questions about the tax implications of some of the different types of real estate investments I was making. Instead of fumbling with it myself, I invited an expert in the field of finances and tax to help me with it. Some of it is quite technical but I told her I’m a fan of numbers. Enjoy!)
Great breakout of some common items that are (mostly) accessible to individuals. My biggest issue with p2p is the ordinary interest it generates and the ordinary tax that we have to pay. That really takes a bite out of the returns. Fortunately, I opened an IRA with one of the providers to juice the return with zero additional risk. 6-8% nominal returns over a long period of time will make me very happy. It should end up as 5-7% of the portfolio anyway, so nothing too significant.

Book sales ($36,000 a year): Sales of How to Engineer Your Layoff" continue to be steady. I expect book sales to rise once the economy starts to soften and people get more nervous about their jobs. It's always best to be ahead of the curve when it comes to a layoff by negotiating first. Further, if you are planning to quit your job, then there is no downside in trying to engineer your layoff so you can get WARN Act pay for several months, a severance check, deferred compensation, and healthcare.
Dividend stocks tend to be more mature companies that are past their high growth stage. Utilities, telecoms, and financial sectors tend to make up the majority of dividend paying companies. Tech, Internet, and biotech, on the other hand, tend not to pay any dividends because they are reinvesting most of their retained earnings back into their company for growth.
Let me disabuse you of that notion right now: making money online is not so easy and you actually have to know what you’re doing. 10 years ago when self-publishing was booming and affiliate marketing was in its infancy, you could get rich with some sketchiness. Those days are long gone now. Self-publishing has matured and it’s far, far harder to propel your way up the all-important rankings. Google has come down hard on the spam and if there’s any hint of that on your websites, you’ll get penalized which means no search engine traffic sent your way. This is the death of the Internet marketer.
This is why we can retire in our 40s. we currently have four streams of income (my salary, husband salary, husband pension and our passive portfolio income which is outside of all our employer retirement accounts). our passive portfolio income is surpassed what most people are aiming for their retirement portfolios. And we don’t sell anything…this is just our dividend income annually. Passive income is the key to flexibility. No employer necessary.
This one is for people who want to work hard but make significant money online. Online learning courses have become very popular on the web, and you can find a lot of Youtube who starts selling courses in their field. It depends on the knowledge you have. If you have an extensive knowledge in Financial Education, then go and open a course. If you are a book bike rider, you can make a course about riding a bike and earn a significant passive income from that.

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If an investor puts $500,000 into a candy store with the agreement that the owners would pay the investor a percentage of earnings, that would be considered passive income as long as the investor does not participate in the operation of the business in any meaningful way other than placing the investment. The IRS states, however, that if the investor did help manage the company with the owners, the investor's income could be seen as active since the investor provided "material participation." 
Buy a small business: A local small business, like a car wash or a laundromat, is a great way to put money down on a money-making venture. Automate it so you don't have to be on the premises unless you're collecting money. Go into a local business with your eyes wide open - study the books, especially on income and expenses, and examine water and utility bills if your venture will be open 24 hours.
Ali Boone(G+) left her corporate job as an Aeronautical Engineer to work full-time in Real Estate Investing. She began as an investor in 2011 and managed to buy 5 properties in her first 18 months using only creative financing methods. Her focus is on rental properties, specifically turnkey rental properties, and has also invested out of the country in Nicaragua.
Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world. Follow @DanCaplinger

Passive Income is nothing but some extra income you generate apart from your primary income. In short you create your secondary income source (without much effort). Why we need, well just to make little more money and to get more security from primary source in case of emergency. No jobs are safe nowadays, so its better to no relay on one source. So, here we are providing you 10 passive income source by which you can generate more extra income.

The E-Commerce model is an interesting one. The idea is that you get products made cheaply (usually China) through a site like Alibaba, ship them to a warehouse (or your own house!), put the product description up on Amazon (or your own website), get some sales and then send out the product. There is a big learning curve with this one and you need some money up-front to get the products.


The ideas that follow are not truly “passive income,” in that they require a significant amount of effort. However, I’m defining the term loosely and considering anything where one hour of work does not equal one hour of pay as passive income. The idea is that you put the work in up-front and then reap the benefits down the road. Read on for my top 10 passive income ideas!

If you qualified as a real estate professional for 2017, report income or losses from rental real estate activities in which you materially participated as nonpassive income or losses, and complete line 43 of Schedule E (Form 1040). If you also have an unallowed loss from these activities from an earlier year when you didn’t qualify, see Treatment of former passive activities under Passive Activities, earlier.
I agree mostly with the real estate advice. I’m looking for ways to take advantage of the condo I own to get up the rent from ~$0.90/ft to the $1.2-1.5/ft that seems more like the range in the same area. I’d have to put in a bit of capital (probably 10k on the low end for just the basics up to 40k if I wanted to remodel the kitchen and 2 bathrooms up to par with the area), so the return is likely there if those upgrades warrant $1.30/ft (given the unit is larger than most 2br/2ba in the area).
I’m a 45 year old business owner who also has focussed on diversifying my income streams. I have a short term vacation rental in Florida that I bought for $390k in 2012 and net rental income for the last three years has been growing steadily. 2015 I am at $70k gross right now but should end up at $80-85k with net around $45k plus we use the place about 35 nights a year.

The IRS requires REITs to pay out at least 90% of its income to shareholders.  Thus, REITs tend to be higher yield since a large fraction of the earnings come out as dividends, which may be beneficial for certain income oriented investors.  The flipside is the tax cost for investing in REITs since income must be distributed and as a holder the taxes flow through to you.

I’m a 45 year old business owner who also has focussed on diversifying my income streams. I have a short term vacation rental in Florida that I bought for $390k in 2012 and net rental income for the last three years has been growing steadily. 2015 I am at $70k gross right now but should end up at $80-85k with net around $45k plus we use the place about 35 nights a year.

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You pay two main types of taxes on earned income, Social Security/Medicare taxes (called FICA, OASDI, or payroll taxes), and federal and state income taxes. The payroll taxes that are automatically taken out of your paycheck have two components. First, 12.4 percent of earned income is paid to Social Security. Your employer pays half of this tax, and you pay half. If you are self-employed you'll pay the full 12.4 percent, however, the "employer" portion of 6.2 percent is generally tax deductible.
Who cares, especially when very conservatively, the ultimate passive income includes a six digit or more base lease, plus an estimated additional six digits or more for rate increases and another six digits for more for various smaller and one bigger technology increase at 25 years. All four (base, rate, smaller and mega technology increases) combined, certainly could yield much more depending upon inflation, rate increases and technology increases?

In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Any loss that is disallowed because of the at-risk limits is treated as a deduction from the same activity in the next tax year. See Pub. 925 for a discussion of the at-risk rules.
Do you know what the single biggest threat to your financial well-being is? The answer is your own brain. They’re people who listened to the Unshakeable by Tony Robbins’ audiobook along with having read the book and they still might become victims to a form of financial self-sabotage. The thing is, for a lot of us, losing all our money and everything we own, especially in one shot, feels a lot like dying. That’s why 80% of success is psychology and the other 20% is mechanics.
Hardy struggled to find space at the hospitals to conduct his procedures. Due to this difficulty, Hardy considered opening his own surgery center. He purchased land and developed plans to build this surgery center; however, before construction started, MBJ representatives approached Hardy to ask him about becoming a member. Mr. Hardy concluded that becoming a member/manager of an established surgery center was a better business decision than building his own surgery center due to the cost of construction, staffing, certifying, and operating the center.
Rentals, just like stocks, throw off cash. With rentals we call that cash “rent”, and with stocks we call it dividends. A significant difference however is that the S&P 500 has appreciated at ~6% per year (above inflation) for the last 100 years…..Real Estate has had almost 0 growth above inflation. So are rents higher than dividends? Maybe, maybe not. But unless you got one heck of a deal, the delta in rent over dividends will have a very tough time making up for the 6% per year difference in appreciation.
The rules in the next two paragraphs apply to any financing incurred after August 3, 1998. You also can choose to apply these rules to financing you obtained before August 4, 1998. If you do that, you must reduce the amounts at risk as a result of applying these rules to years ending before August 4, 1998, to the extent they increase the losses allowed for those years.
While all employees can benefit from 401(k) plans right now, the retirement options for Americans have not been improved to suit the ever-changing needs of the elderly. One of the biggest reasons Americans can’t save as they used to is debt. At present, people are in debt even before they are fully employed. If you are in debt like most Americans, then earning passive income is more important than ever. It can help you pay down debt and generally make you more financially secure.
Whether you take a “distribution” (aka free-cash-flow) in the form of a dividend, interest payment, capital gain, maturing ladder of a CD, etc, you are still taking the same amount of cash out of your portfolio. Don’t fall for the trap of sub optimizing your overall portfolio’s performance because your chasing some unimportant trait called “income”.
Passive income, in a nutshell, is money that flows in on a regular basis without requiring a substantial amount of effort to create it. The idea is that you make an upfront investment time and/or money but once the ball is rolling, there's minimal maintenance required going forward. That being said, not all passive income opportunities are created equally. For investors, building a solid portfolio means knowing which passive investing strategies to pursue.
But two months later, with the economy slowing down after the financial crisis, his firm began laying people off, and Flynn was informed that after his current projects were finished, he also would be out of a job. At the same time, he couldn’t help but notice that in the LEED exam forums he had frequented, people were referring to him as an expert and directing questions his way. He began to think he might capitalize on that.
That $200,000 a year might sound like a lot to you, but the median home price in San Francisco is roughly $1.6 million or almost eight times our annual passive income. For a family of three in 2018, the Department of Housing and Urban Development declared that income of $105,700 or below was "low income." Therefore, I consider us firmly in the middle class.
This is important to understand this because it is a difference of how you spend your time. No-joke big-time investors make money in their sleep without putting in any effort because they invest in passive income investments. If you are putting in effort, while you might be making bank and doing great at it, you are working. You are making a lot of income because you are rocking out a J-O-B. The no-joke big-time investors, if you’ll notice, also put in a lot of effort but their effort is not on what is currently making them income, it is on finding the next thing that will provide them more income!
You can offset deductions from passive activities of a PTP only against income or gain from passive activities of the same PTP. Likewise, you can offset credits from passive activities of a PTP only against the tax on the net passive income from the same PTP. This separate treatment rule also applies to a regulated investment company holding an interest in a PTP for the items attributable to that interest.
Basically, people looking to borrow money will make a listing on the site. Those borrowers are then placed into a category and given a “rating” based on their credit history and rate. You, as an investor, will contribute money to these loans and then be paid back at the predetermined rate of interest. Invest and see those monthly interest payments deposited into your account.
The activity is a significant participation activity, and you participated in all significant participation activities for more than 500 hours. A significant participation activity is any trade or business activity in which you participated for more than 100 hours during the year and in which you didn’t materially participate under any of the material participation tests, other than this test. See Significant Participation Passive Activities , under Recharacterization of Passive Income, later.

Case Schiller only tracks price appreciation of RE. RE as rental investment vehicle is measured primarily on rental yield or cap rate or some other measure. Price appreciation in that scenario is only a secondary means of growth, and arguably should be ignored as a predictor of returns when deciding on whether or not to invest in rentals. More important key performance indicators for rentals are net operating income and cash ROI. Appreciation, if it occurs, is a bonus.
What I find most interesting is the fact that I had never considered options like LendingTree or realityshares for other income sources. Investing in property has been too much of bad luck for people that I know personally, so I am interesting in getting involved in a situation where I would have to be dealing with maintenance issues or tenants. There are services for you to do that, but I had not come across any that didn’t eat most if not all of the earnings. Then again, I live in the NY area. Investing in the midwest would not be reasonably possible for me, directly, but reading about realityshares is something I am going to look into further. That might be a real possibility.
I prefer assets that make me a high return for the lowest amount of work possible (semi-passive involvement). And assets that pay me in several unique ways. Cash flow is only one way RE makes money for me. I also get principal reductions, appreciation, tax advantages (depreciation), and I control the rental increases on a yearly basis. Plus a majority of the capital is provided by the secondary market on 30 year fixed low interest rate debt.
To save time and effort, a person can group two or more of their passive activities into one larger activity, provided they form an "appropriate economic unit." When a taxpayer does this, instead of having to provide material participation in multiple activities, they only have to provide it for the activity as a whole. In addition, if a person includes multiple activities into one group and has to dispose of one of those activities, they’ve only done away with part of a larger activity as opposed to all of a smaller one. 
Further playing off of your talents and ideas, you can easily sell products online nowadays, too. Find companies where you can sell your musical talents for jingles. Look for companies who need freelance designers. While you can earn passive income through these royalties, again, it will take time and work to produce your craft, whatever it may be.

Friends and family like to ask me, “I have an app idea. Do you have any advice on the best approach?”. There are a number of ways to get from point A to point B. I’ve had a few rough experiences going through the growing pains of developing my first app. Those experiences saved me a lot of time and money in the future. I’m here to share with you my top 5 tips to successfully make app passive income.
Because you’re publishing an eBook rather than a physical book, the costs are minimal. And you don’t have to print 1,000 copies of your book hoping someone will buy it. Instead, you can write your book, create a fancy cover for $5 using Fiverr and publish through services like Amazon Kindle Direct Publishing. Amazon will handle everything for you, then take a percentage of the revenue you generate.
Writing an e-book is very popular among bloggers, as many have noted that “it's just a bunch of blog posts put together!” You will not only have to make an investment of time and energy to create the e-book, but market it correctly. However, if marketed correctly (through blogging affiliates in your niche, for example), you could have residual sales that last a very long time.
Good suggestions. I have many of these. One word about the “app” idea. I had a great idea related to personal taxes that I tried to get off the ground with my accountant as a partner. I would say it’s difficult to do this unless you have a coder on your team. Hiring someone is not really viable financially unless the app is simple. When we finally got the quote for a coder to write what we wanted (and after doing lots of mock ups ourselves and getting a demo for investors) the estimate was about 750k just to really get started.
But, wait: nothing is ever that easy; And, there's no such thing as 100 percent passive income. Building passive income actually requires hustle and an investment of time upfront to get your money off the ground and growing while you eat, sleep and play. Maintaining that growth means making sure that you're using the right tools and strategies to automate the work for you.
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