Income Producing Assets

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One of the keys to building wealth is investing in income-producing assets. These assets make it possible to grow multiple streams of income, and they can also serve as sources of passive income that require little-to-no work on your part.

Regardless of whether you’re looking for a source of retirement income or just looking for ways to grow your wealth faster while you’re still working, income-generating assets should be a key part of your plan.

According to research done by Tom Corley, 65% of millionaires have at least 3 streams of income (source). If you want to join them in the ranks of millionaires, creating and developing multiple streams of income should be near the top of your list of priorities.

→ Related reading: Living Off Dividends: How to Use Passive Income to Cover Your Living Expenses

Income Producing Assets

Let’s take a look at some of the most popular, practical, and realistic options for generating income from your assets.

1. Rental Properties

When you think about income-producing assets, real estate and specifically rental properties may be the first thing that comes to mind. Many millionaires have built their net worth by purchasing rental properties that consistently generate income month-after-month.

A rental property could be a condo or townhouse, or it could be a single-family home. Multi-unit properties, like duplexes and larger apartment buildings, can be especially lucrative for landlords.

Of course, owning rental properties can also come with a lot of work and effort on your part. If you don’t want the responsibilities of being a landlord, you can outsource the property management to make it a more passive source of income. You can maximize the cash flow and keep more of the money in your pocket if you’re willing to put in some work and manage the property on your own.

One of the nice things about owning rental properties is the fact that it can be done on a small scale or a large scale. You can buy a single rental property to get started, or just rent your own house when you move instead of selling.

A single rental property can produce some monthly cash flow, in the right scenario, or you could scale up and purchase many different rental properties to grow your empire.

Getting Started: Read How to Generate Income from Rental Property

Highlights of Rental Properties:

  • Proven method for growing wealth used by many millionaires
  • Can be done on a small scale or a large scale
  • Requires a lot of work if you are managing the properties yourself

2. Short-Term Rentals

Instead of renting out a house or property to a tenant, you could focus on the short-term market for people who are traveling. This could involve turning your existing home into an income-generating asset by renting a single room or a unit, if the home has a separate unit.

Aside from renting out a room or a unit in your home, another option is to own a vacation home and rent it out. It’s possible that you could use the home for yourself and your family at times throughout the year, and then rent it out when you’re not using it to make some money from this valuable asset.

You can make very good money with short-term rentals, but typically, there will be more work involved because you’ll be cleaning the room/unit and turning it over frequently.

While it’s possible to make money by purchasing a property for short-term renatals, probably the best (and lowest-risk) way to get started is to rent out a room or unit in your existing home. You may be able to start making some money from your home with little-to-no upfront investment.

Getting Started: Read my interview with Riley on how to rent a room on Airbnb to read a great story about a couple that has turned their home into an income-generating asset.

Highlights of Short-Term Rentals:

  • Rent a room or unit in your home or a vacation home
  • Turn your unused space into income
  • Requires work to clean the room/unit between tenants

3. Real Estate Crowdfunding

Investing in real estate appeals to many people, but the hands-on nature of owning property and being a landlord prevents many people from getting started. Fortunately, there are ways to invest in real estate with or without owning property.

One of the easiest ways to get started with real estate investing is through crowdsourcing. There are many different online platforms that allow you to invest in real estate without the need to own or manage properties, making it a great option for many people.

Although a lot of different companies fall under the umbrella of real estate crowdfunding, there are a few different possibilities:

Investing in individual properties

Some platforms like Groundfloor, EquityMultiple, and PeerStreet allow you to invest in specific properties, but even within these options there can be a big difference in the projects.

Groundfloor is open to any investor and you can get started with as little as $10. As an investor, you’ll be providing money that will be used by flippers and real estate developers. Most of the projects are short-term (6-12 months) and on average you can earn about 10%, although the details vary depending on the specifics of the project.

EquityMultiple and PeerStreet are for accredited investors only. With EquityMultiple, you’ll be investing in commercial real estate with a minimum investment as low as $5,000. PeerStreet has a minimum investment of $1,000 and you can select from the available projects, with most of them being residential.

Investing in portfolios

There are some platforms that allow you to invest in a portfolio of properties, rather than investing in a specific property. The most popular platform for this type of investment is Fundrise. Fundrise offers a few different portfolios that you can choose from. The Starter portfolio allows investors to start with as little as $500. They also offer three different Core portfolios (supplemental, balanced, and long-term growth) that each has a minimum investment of $1,000. The Core portfolios allow you to choose something that fits your needs more specifically than the Starter portfolio.

Getting Started: The easiest way to get started with real estate crowdfunding is to invest wi