Eric is a real estate investor and founder of MartelTurnkey. MartelTurnkey sells rental properties to investors looking for passive income.
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According to the IRS, the majority of millionaires have broad sources of income — often more than one. Outside of their primary salary, many millionaires make money from multiple other jobs and/or investments simultaneously. While more than one or two jobs seem like a lot, many of these sources are not necessarily full-time jobs. Oftentimes, they’re businesses, dividends and investments. Real estate, in particular, attracts investors of all income levels. What makes the passive income from investment in real estate attractive? In my own experience and as a business owner focusing on real estate investing, I’ve found four distinct reasons those looking for passive income are attracted to real estate.
If you’re unfamiliar with the concept, passive income is money generated from investments or side gigs that allow you to achieve a steady flow of cash with a smaller amount of effort than a full-time job might require. Let’s just say that if you ever dreamed of making money while you sleep — or are on vacation — you’re probably thinking about having a solid stream of passive income. While I focus mainly on real estate investments, there are other passive ways of earning an income to which the following four reasons would also apply.
1. It Is One Alternative To The 9 To 5 Rat Race
Needing to show up to a job that you can’t stand, five days a week, at least eight hours a day, can feel like torture. And sadly, way too many people find themselves stuck in this situation out of fear of not being able to support themselves and/or their families. That’s why working as hard as possible to build some sort of passive income feels so attractive to investors. It may take a bit of time, but investing money in something like a rental property can put you closer to earning passive income. Eventually, you may even be able to leave your current job and build your own schedule. That being said, if you would like to find a way to make enough investment income to support yourself and your family, make sure you do the math. You need to make enough to cover all your costs. This includes expenses your employer would no longer be providing for you, such as health benefits and retirement fund matches. It’s important you make these calculations before you transition from a full-time role to relying solely on investment income.
2. It Can Give You More Free Time For Hobbies And Passion Projects
Having a 9 to 5 on top of managing a household and spending time with your family is more than a full-time job. This is why so many people wish they had more time in the day to focus on a hobby or passion. This is another attraction to building a stream of passive income. It frees up some of the time you would normally be spending on a full-time position. It offers the opportunity to invest in yourself and your passions. In the early stages of your transition from full-time employee to being your own boss, you’re going to have to learn exactly how to balance your new lifestyle. Working from home can have you spending even more time with your family, but being your own boss also means that you need to motivate yourself to create, produce, learn, invest and more. Like all lifestyle changes, it may take some time to get used to balancing your free time so that important tasks and obligations are not neglected.
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3. It Can Help Decrease Stress And Increase Happiness
Another reason passive income is attractive is that it can take some of the pressure off of a full-time role. If you have income outside of a regular full-time job, you can more easily treat work like an option rather than a necessity. You might find yourself more in control of your schedule because you’re able to work less in a full-time role or even not at all. This can give you more flexibility and an opportunity to spend time with family or vacation. Real estate investments still need attention, however, and you’ll need to make some adjustments if you’re totally relying on passive income to support your lifestyle. You may find yourself spending time talking to property managers involved in your investments or taking the reins yourself on issues that come up. You can plan for these responsibilities while still enjoying the freedom gained from not having to report to work every day.
4. It Can Help Provide More Money For Investing
It’s often said that it takes money to make money, and having passive income is one way to do this. Investors are attracted to opportunities that deliver income because of the potential for reinvestment. Ideally, passive income will give you the ability to have a steady stream of income to live off of, while also being able to set some money aside for investments. As your passive income does begin to increase, you may be able to put that money into more real estate investments or projects that you believe in. It’s important to realize, however, that when you are living off of passive income, there are a lot more uncertainties you’ll have to deal with. While some months may leave you with a lot of extra cash to put into new investments, others may not. In addition, there may be months where are unexpected property vacancies arise that you’ll have to deal with. That’s why it’s always a good idea to leave yourself with enough extra cash to cover any emergencies or unexpected issues that arise.
While it’s important to remind ourselves that money isn’t the most important thing in the world, it certainly has — whether we like it or not — significant effects on our day-to-day life. Building passive income has attracted investors of all budgets for the potential opportunities it offers. It can help investors become financially independent while feeling emotionally uplifted and balanced. It requires hard work and planning to transition into a lifestyle fully funded by passive income. But those seeking the benefits — time for family, friends and happiness — have chosen to accept the tradeoffs of careful planning, stability in a full-time role and high fiscal responsibility.
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