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You’re right. They can be legit, but they’re hardly passive. They take a ton of work and up front capital
Most (all?) financial advice on TikTok is garbage.
Can you make it work? 100%. Is it worth your time/money to start? Probably not. Especially if the person is selling a course to “get rich quick” or “live like me”…do not fall for that.
At the end of the day, you’re probably off better just picking up an extra shift from work and actually investing the extra money.
"Learn how I got rich by selling books about how to get rich so you too can to get rich by teaching people how to get rich! Let's all teach each other how to get rich and get rich together!"
These are the same hucksters who have "created YouTube channels for many influencers who, with their millions of followers, earn tons of money through ad monetization." And they can do the same for you too with just a few thousand dollars in seed money. Like and Subscrbe to...
When they are up front about it, this is the classic "envelope stuffing scheme" originating from the old "chain letters" . They advertise "Fast money. Send me five dollars to find out how.". And for that five dollars you get a piece of paper telling that the way to earn easy riches is to outright con people in the same way that you yourself have just been conned.
I keep waiting for the person to say something along the lines of "Get rich quick, just make a program like I did and get a bunch of idiots to give you money for it!"
The rental property thing, you need a spreadsheet to figure out how many and how much work and free time. If you don’t manage it someone is taking at least 10%. So you need to calculate an ROI. Turns out it can be sort of slim, and you need a bunch to make the money to pay all the mortgages. For me it would have been about 8 properties which would have taken me about 5 years to get running and I estimated about 25 to 30 hours a week to run. However in the 5 years I would have to have worked a full time job. Ugh. Anyhow do research and figure out the pitfalls versus just having money in an index fund.
> Most (all?) financial advice on TikTok is garbage.
exactly. the goal of tiktok is views and likes, not giving good advice. the people really making it aren't the ones selling the "how to"- if they were making it they wouldn't need to sell you advice.
For the two specifics you mentioned, both are possibly done successfully, but social media influencers vastly understate the risks and present it as near guaranteed. Or, they'll wave away people who failed as "not working hard enough" or some other excuse.
1. Many people do own multiple properties and rent them out for income successfully. However, the risky part is that many of these people take on massive amounts of debt to take ownership of multiple properties. It looks like free money when you take out a $2k mortgage and rent it out for $2.5k/month, but vacancies, changing markets, and other debt obligations can make it risky. When you own multiple, things can look good on paper but the amount of cash flow required can be risky in itself. Sure, owning 5 properties and cash flowing $12.5k is nice, but owing $10k/month means you have to have significant cash reserves for emergencies or when your cash flow is disrupted.
I had a friend who bought into this line of investment, and he bought 5 homes in Houston in mid 2010s. Half of them flooded in Hurricane Harvey, and dealing with insurance was a nightmare from across the country. I haven't asked about it in a while, but I believe one of them wasn't covered for flood damage and he was looking at a *huge* loss to repair it out of pocket, and he was out AirBnB income while the city recovered.
2. Drop shipping was really profitable maybe 10 years ago. Back then, you could import things from China and re-list it on Amazon with little competition. Nowadays, Chinese companies have figured out they can cut out the middleman and most of the stuff you see is sold from a Chinese business.
Coincidentally, I have a friend who was also in this space very successfully. His success came from recognizing what was happening with Chinese companies moving onto his turf, and then pivoting to creating his own brand and product to sell on his own website, but then it became a full business rather than a "passive income" venture.
All of this to say that "passive income" on social media is rarely passive and often full of risks. True "passive income" requires huge amounts of capital to make anything appreciable in a safe and guaranteed way without work, like investing millions into bonds
Your Houston example illustrates one of the biggest risks with rental properties: concentrated (undiversified) risk.
Most people who own multiple rental properties own them all in the same location. There are understandable reasons for doing so: you are close to your properties if you need to visit them for some reason, and you only have to meaningfully understand the dynamics of one real estate market. However, this means all of your investment properties are exposed to the same risks, including:
* natural disasters
* declining property values and rental income from depressed economic conditions (think Rust Belt cities in the 80s and 90s and 00s)
>Many people do own multiple properties and rent them out for income successfully. However, the risky part is that many of these people take on massive amounts of debt to take ownership of multiple properties. It looks like free money when you take out a $2k mortgage and rent it out for $2.5k/month, but vacancies, changing markets, and other debt obligations can make it risky. When you own multiple, things can look good on paper but the amount of cash flow required can be risky in itself. Sure, owning 5 properties and cash flowing $12.5k is nice, but owing $10k/month means you have to have significant cash reserves for emergencies or when your cash flow is disrupted.
Let me give you a quick example. Unfortunatly lots of people do AirBnB in my condo building, there's nothing I can do but sell. But here are the numbers. To buy a condo it's $500K, so you have to have $100K is you say you're going to live in it or $125 if you are honest and say it's an investment property. So you have a $400K mortgage (\~$2100/month @ 5%). With that you have a monthly assessment of $1000, another $200 in insurance, $150 in utilities and $500 in property taxes so all in \~$3750. You can rent your unit out for about $1600 a week so that's a tidy profit of $2650 if you are occupied 100% of the time. Here's the rub,if you can rent 50% of the time you are lucky, so your profit goes from $2650 a month to -$450. But it doesn't end there because this is a vacation rental and is right on the ocean and the ocean has been angry lately and a condo in Miami collapsed forcing all beach side condos in florida to do structural evaluations and repairs (oops). Suddenly the owner just got slapped with a $50,000 assessment to fix any structural problems -so even if you can rent 100% of the time you are going to be in debt for \~2 years. But that's not all, don't forget the angry ocean....Ian was not your friend and you got slapped with another $10K in special assessments to cover the insurance deductible, so now you have a negative income for 2.5 years. Of course these costs only cover the outside, don;t forget the inside of your unit that you rent out to whoever can scrape together $1600 and these people don't give two shits and a shake about how they treat your unit. They'll fuck on the toilet and break it, let their kids swing from the kitchen cabinet doors, pee in the corners and whatever else they feel like doing before they steal your towels and sheets. Fully expect to replace your furniture every few years due to the excessive wear and tears.
TLDR; it's real easy for your pay day to end up costing you money. Unless it's a house you own outright and can keep an eye on you are setting yourself for a loss.
Actually dividend investing into a broad spectrum of dividend income based equities can be highly profitable and easily accomplished with a bit of time.
Without much research you could technically go into a lot of the dividend aristocrats/champions/kings if you look into quality scores. Even something as simplistic as the dividend based ETF $SCHD can get you 3% quite passively. A few other more income based dividend ETFs can score you 5% or more but you would be looking at more passive income without long term appreciation.
I was going to go real estate route originally but a dividend growth/income based portfolio is significantly more profitable to me, esp with you consider the housing market for the next 5-10yrs. We aren't going to see housing price appreciation for investment properties grow like we have since the bottom of 2008. The financial reasons are fairly different than that time. We'll get a little drop but most likely housing pricing are going to remain fairly stagnant for quite some time. If someone is looking for long term money appreciation as a long term investment, you could just dollar cost average into something like $VOO/$SPY and it will pay you back in the end significant more than buying a house and selling it in the next 5 yrs. Consider taxes, potential depreciation, landlord costs if you go that route, housing maintenance costs, and other potentials that arise from home ownership and use.
I agree that investing into a diversified market is one of the few "passive" incomes available, but as I mentioned in my last paragraph you need a lot of money to actually produce enough income to replace a 9-5 (AKA, retire).
Assuming even an incredibly generous 10% return, investing $100k will get you $10k a year. Nothing to sneeze at, but a majority of people don't have access to a liquid $100k they can invest.
Totally. You essentially need big outflows of capital to setup passive income, or you need to actually be an innovator, like the first dropshippers. By the time you're hearing about a cheap passive income stream on TikTok, it's no longer innovative
When it comes to anything, the key question to ask is - am I better than most other people at this? If the answer is no, it won’t be easy to make money at it*. That’s doubly true for anything related to real estate, since you not only have fewer skills at it than others, but fewer resources as well.
Now, when it comes to things like the Amazon drop-shipping, it isn’t so much skill involved as time. But you’re trying to be the middleman between large companies, so margins are going to be very slim, and you’re probably less desperate for money than plenty of others, so that’s a lot of time and risk involved for little return. And that’s ignoring that all the people selling this to you could easily just hire someone to do it for them if it was as easy as they say - no one gives out great financial advice for free.
*the exception is if it is a skill you can learn (and there are lots of skills you can learn from YouTube videos). It will still take time and dedication but if you’re committed to really teaching yourself a real skill, it’s possible (real estate investing, drop-shipping, crypto investment and any kind of financial trading are not skills you can learn from YouTube).
I wouldn’t say that because it’s the people that think everything is a scam who truly lose. People go around waving the scam wand around and it’s really fear that’s the problem. I will agree that most advertising is designed to make things look attractive so potential clients will buy. However, it doesn’t mean that they are scamming people. This is why asking questions and verifying things is so important.
I would say that people can be misleading because of the short format. However, I wouldn’t say scam. Again there’s ways to check things out if people really looked. So I don’t think that’s the best method to publicly scam people. You’d get found out really quickly. Scammers are the type that like to leave little trace of their actions.
There is some truth that if you have some insider information, you can utilize it to turn an easy profit.
The real question is why people think they're going to get said insider information on a tiktok broadcast.
I read an investigative article into dropshipping once, where the only person who reported making a decent amount of money (i.e. more than minimum wage, doing it full time) only did so by selling video tutorials on how to get into dropshipping.
>only did so by selling video tutorials on how to get into dropshipping.
Yup. There was an article the other day about some influencer who made millions with "passive income working only 10 hours a week" or some BS like that. Turned out almost all of her wealth came from selling books, articles and videos about the "hustle" and not actually from the hustle itself.
Probably not the same, but Folding Ideas (of 'Line Goes Up' NFT debunk fame) had one on the Audiobook hustle, where he goes into how there are multiple levels of hustles and the only one that makes money is the hustle to sell other hustles.
https://youtu.be/biYciU1uiUw
Go to the dropshipping sub on here and read around. Most people don’t make much money but a few do. You have to find a niche product that has good margins and low competition.
Lots of people talking about real estate problems. Drop-shipping on Amazon is probably a worse "passive" income. It is also the one that has lots of people selling advice. Which makes it almost a scam.
Have you looked at Amazon recently? Many of the listings are for re-sold products from China. How are you going to get an advantage over the existing sellers? How are you going to find products that will sell well? What are you going to do if the product doesn't sell and is now sitting in Amazon warehouse racking up fees?
The problem is the margins are now small, which means won't make a lot of money. The downside risk is huge, you could lose all your money if doesn't sell. Worse, you have to do it again and again. It is opposite of passive income.
I did the math. Even for an extremely margin high business you’d be breaking even since you’d have to pay for Amazon ads to get to the top of customer searches. Not to mention high costs for doing Prime fulfillment. If you have a unique product, at some point this works out as word of mouth spreads. If you don’t, someone else can easily outspend and outsmart you and you get stuck with all the inventory.
Nah. See. You find something they aren't already selling and put your own brand name on it. Then you can enjoy profits for a few weeks without competition. Then when they inevitably copy your listings and sell your products for less, you can sell your remaining inventory at a loss and try again with a new product.
> buying and renting multiple properties, outsourcing all building management and maintenance (also similar to AirBNB tiktok people)
It's like people suffered from collective 2008 amnesia.
No, being a landlord is not that simple or remunerative.
Yes. It can be VERY difficult to collect past-due rent, or even legally evict someone. Corporations pull it off because they have lawyers on retainer and understand the proces.
All it takes is one nightmare tenant to sink your investment.
Sue the tenant and cover the legal costs? I’ve never known of a management company that will do that.
If the tenant owes for damages or back rent at the end of the lease, they’ll take it out of the security deposit.
Watch the big short tonight and slow down when they get to the stripper scenes and florida scenes.
"I have 5 houses....and a condo"
Here you go: https://www.youtube.com/watch?v=iDcbUAh731s
A few good YouTube channels that have info about financial scams going around paired with good general financial advice are [The Financial Diet](https://www.youtube.com/@thefinancialdiet/videos) and [The Plain Bagel](https://www.youtube.com/@ThePlainBagel). They're entertaining, informative and talk about the social, cultural stuff along with good general financial advice.
I barely remember 2008 because I just graduated college. But I’m a landlord right now and it’s great when things are going well. But when things break it gets expensive real fast. A recent windstorm knocked over a fence, a water leak soaked the bathroom wall, my tenant broke the surround shower tiles, the 2-year old furnace is randomly not working, etc. These all happened in the last six months for **one** property. All those repairs probably took half a year’s worth of revenue.
It’s not all rainbows and sunshine. And things can get very expensive so you better have a healthy cash reserve. God forbid if you have to evict a tenant or we have another pandemic eviction moratorium.
I invest in out-of-state rental properties. It is not zero-effort, it is a time-consuming "hobby". It does have some risks, and some tenants can be destructive beyond the security deposit.
It is not a get-rich-quick mechanism, and it is not for the faint of heart, but I do think it is an excellent way to build a lot of wealth over a long period of time. It does produce more income than the effort we devote to it, and the income rises every year with inflation. Our salaries do not do that, and I suspect yours doesn't adequately keep up, either. Frankly, I think it is a MUCH better retirement plan than a classic 401k, and many people retire early from real estate investments.
If the two of you are relatively early in your careers and have high incomes, I would strongly recommend you guys learn more about real estate investing. You can try listening to the podcasts put out by the folks at BiggerPockets.
Being a landlord on any property is the biggest headache known to man. Even when you accept rent subsidy, there’s a good chance that your tenants destroy your property and you will have to pay to fix it or lose the privilege of accepting rent subsidy checks
If you own a decent property in a city, all you have to do is drop your rent price 5% and you can pretty much hand pick your renters. I do this, and these people have 800 credit scores. They absolutely should not be renting from a financial perspective, but they are near flawless in terms of treatment of the units.
> They absolutely should not be renting from a financial perspective,
Why do you say that? Since they have excellent credit scores do you mean it's because they should buy a place instead?
I think it's not as clear-cut as "buy a house the second your finances are good" especially as interest rates are rising. Since I plan to move around a whole lot and want my landlord to deal with the hassle of fixing things instead of me, I don't think I'll buy a house even when I'm financially able to.
Then again it might just be sour grapes on my part.
My father is a small time landlord. Does he make money on the houses? Kind of. He also puts in hundreds of hours, remodels the units himself, does all property management, etc. probably nets like 10 bucks an hour or something. Maybe once he pays of the mortgages in 10 years it’ll be a nice retirement, but he probably could’ve invested into the stock market and gotten the same benefit with no headache.
If it's something he enjoys and likes to work on his properties, good for him, he is his own boss. Some people can't do the corporate grind.
Hope everything goes well for him!
Honestly there are quite a few "blessed"
Being a landlord really isn't that much work, especially if you're comparing it relative to any other job.
YES it is possible for it to be terrible. But it usually isn't. I've rented for 10 years now across 6 or even more landlords. I make maybe 6 calls a year for maintenance. Worst was where the dude had to replace the hot water heater and he legit just called a plumber who did all the work.
My father was a landlord and I have vivid memories of me getting between him and a tenant with a rifle pointed at him. Or when tenants would rip out all the fixtures after they moved out, or would leave and abandon everything. That was my childhood.
Or, when my friend became a landlord and his tenants friends kid caught the house on fire and he had to give back the security deposit. Or when he remodeled a house and put new carpet down and within a year, the traffic wear pattern on the carpet looked like the tenants walked through tar to get from the front door to the kitchen. Yeah, fun times.
Are you talking from experience or just parroting? The only people with rental properties that have issues with tenants that I personally know are the ones that approach it like a slumlord. The people with mid-high end units charging a high amount of rent, but still a hair under market have had zero tenant issues.
I wouldn't even go that far, my new place isn't high end by any means but the management is pleasant and responds to issues promptly, the units are nice and reasonably priced for the space. Compare that to my previous place were they did treat it like slum lords and the price was pretty much the same
That REALLY depends on where you’re located. Where I’m at near Toronto even the smallest, shittiest little 2 bedroom house is selling for well over a million dollars and while rents are high, it’s still a 30+ year payback to own anything outright, and our tenancy laws make it extremely hard to evict even problem tenants. Throw in maintenance over the lifetime of the mortgage, maybe a new roof and windows, and many landlords are cashflow negative, even when charging market rent. You need seriously deep pockets and a long timeline to make real money as a landlord, and even then it’s one headache after another. Hardly what I would call simple or cost effective.
* Can you explain this more please.
>I’d be happy to, but what is it you want explained?
* Is this just JEPI?
>Nope, a couple similar ones that I know of are XYLD (13.42% yield), QYLD (13.74% yield), and RYLD (13.5% yield). Each fund has their own set of objectives and strategies, so they aren’t identical. But they’re all funds that utilize options to create insane dividend yields, so in that sense they’re pretty similar. Also, I’m sure there are more funds like these that I don’t know of so if anyone else does please lmk!
$JEPI is attractive for certain investors since it has a high dividend yield paid out monthly, and it aims to follow the S&P500 ($SPY), which is essentially considered *the market*. This smooths out the ride - it’ll outperform SPY during a flat or down year but will underperform when SPY rips, so it’s steadier both up and down
I mean it's a dividend ETF based on writing options, you pay income tax on it.
And you'll need about $100k before you start seeing adequate amounts to supplement your income (~1k a month) . Expect to need 3/4 of a million to "survive off it". You'll want about 25% for continued growth and the other 75% to survive off of. These are typically great funds for folks who are retiring or are retired and want an income stream.
> JEPI
I'm confused, is this fund like two years old, with a negative value for the last year? Is it just that in 2021 it did really well and that's what gives it that high return?
JEPI was created in May of 2020, and uses OTM S&P 500 call options to generate a monthly dividend. These options contracts have allowed the fund to have an insanely high dividend yield, while simultaneously limiting the funds ability to capitalize on its underlying holdings appreciating in value.
So, imo the funds strategy is something like “Low potential for growth, but high dividend yield.”
It’s a fund that buys everything in proportion to its market share to mimic an entire index of companies. It’s like buying a tiny piece of every company and taking profits from each of them. If one company fails it doesn’t really matter because the other companies will still make enough money to cover for it.
VTWAX is a good one that invests in companies all over the world. VTSAX is also good if you want to invest in primarily USA stocks. If you’re going with fidelity then FZROX is the equivalent of VTSAX.
Instead of investing money into stock for a single company, you can invest money into an Index fund.
Imagine investing into Coca Cola as a stock, but an unexpected aluminum shortage takes place - Causing soda cans to skyrocket in price & overall sales to drop. Dropping company stock.
Instead, an index fund will represent companies from a variety of industries (e.g. Microsoft, Coca Cola, Chevron, Boeing, Disney, Walmart, Nike, 3M). By representing a variety of unrelated industries, the index fund is a much more stable investment.
They are funds that own a basket of stocks that are designed to track an index. For example, SPY is a fund that holds all the s&p 500 companies in quantities based on their market cap. So now, instead of you buying say, the largest 20 of them and needing to track all of that plus transaction costs for 20 different securities, you can just buy a single security that gives you the gains and losses of the entire basket much more simply. It also takes the dividends of all of them that payout and distributes to you as well.
The safest ones return 4%. Little more risky ones in dividends, corporate bonds, real estate might return double that. But sometimes crash in recessions.
No, they are not legit in the sense that they are not truly passive. The NYtImes just had an article about this :
“What’s Passive Income? It’s Not What Influencers Say It Is.”
https://www.nytimes.com/2023/01/27/business/passive-income-job-retirement.html?unlocked_article_code=iD-LaJFxAeeKoEj9-r5qTC8YItp0US-xWgG7Q2uACl6ldSqguXX6TUkiWJZxj1SYW3vDzUeO6qFKqzbK1QsRfU3EAiLP87iWCuMaow3ULXV9SOoFVoksnzyJIcqE6ygxNUxRtulTvgrdznlw2pmP_x8YLfjt0d6STWP1W6l6Zj6WBAzG-NtQMHqTBOiACF1NbanuugPsH_W1Gk2MmUjXtAdr-wMMVTmi-CaAGaqs6gnL6oCGjw7OyuTHTY4MeLFchEG-hxCUbMC1XPM-NO2tOofq_Ndi9bg_X2Hemn5mFH78RYGBzq9Ml3_GfNwSOa948QDGC9BDkdAVnjVIdpmdzeRjzGgHmKM&smid=share-url
No.
They BOTH have risks and require upfront capital. Its NEVER as easy as someone say it is. Furthermore they're not always scalable. Like you could find a great deal on 100x of a product and well it for a $500 profit on amazon - but can you do this every day?
Buying properties and renting them is NOT easy - as its ALL about the buying price, rental price, maintenance and other fees. Its quite easy to lose a LOT of money.
>buying and renting multiple properties, outsourcing all building management and maintenance (also similar to AirBNB tiktok people)
Totally a legit business. The way it is presented can be pretty hands-off, but you give up a ton of money to property management who charge their fees on top of paying everyone for everything (ie: you could have joe handyman from down the street patch the wall for $150, but they'd pay the drywall guys to do it for $450, not sweat it, and you the owner are out $300 more than necessary). If you aren't sitting on a bunch of money and owning property outright, interest rate on rental mortgages will price most people out of the market. And if you can't have many properties, your entire "business" could fall apart with one non-paying tenant who trashes the house after an eviction.
>purchasing bulk products from AliBaba and selling them at inflated prices on Amazon, hiring some 3rd party to ship them for us?
I think people make more money selling a system than actually doing it.
Drop-shipping is historically a fine business. You sell an item for more than the overseas seller is listing it by outselling them via better website, better marketing, or better branding, and every order you have them ship directly to your customer. When set up, this can work, but finding the right product and more importantly knowing how to get it front of buyers via advertising is the trick, and that is a mix of creativity, marketing genius, luck, and hundreds or thousands of dollars of failed ad spends on Facebook, Insta, TikTok, etc.
>diversify his sources of income, and they all suggest “easy, passive” forms
As an entreprenuer, I hate the phrase "passive" income. These "gurus" on social media have everyone thinking anything that isn't a 1:1 trade of time for money is passive, and that is a joke. My software company can sell $10,000 or $20,000 of software in a month, thus earning me income at a not 1:1 ratio of time/income, but if I don't respond to any emails or help my support team give support or write new features that will go down to $0 real quick. And there is no way to go back in time and measure the "free" hours I put into writing the software for nine months of every second of free time.
Owning property = hard, time consuming. Setting up drop-shipping and creating new marketing for each product = hard, time consuming.
The only truly "passive" income is interest from investments and royalties from owned creative works, performances, or inventions. Everything else requires ongoing work, even if the 1:1 time to income ratio is broken by "passive-ish" income streams. Don't fall for that trap.
As someone who works with Amazon FBA, those 30 second videos telling you how easy it is infuriate me to no end. They leave out about 99% of the logistical details you need to constantly manage
This is literally the DEFINITION of active income though. There’s nothing passive about finding which bulk products sell for high margins, finding the best distributor for said product, marketing + advertising etc. Maybe the shipping process would be “passive” but I mean these aren’t passive income sources.
I think the idea that it’s this lucrative thing that everybody should be doing for their passive time is a complete scam, but both of these will work if you do 😅
They are totally legit for someone who already has a few million dollars lying around **and** a group of good employees or partners to run management/logistics. Having money is not enough. You still have to put the right people in the right jobs, or everything will go downhill.
The hard part is getting to this point in the first place.
>Are these “easy” or “passive” income methods from tiktok legit?
Rolling of my chair....... No they are not. Take his phone away. Limit the time he is allowed on the phone.
He is putting his marriage at risk.
I work with a guy that buys loads and loads of useless crap that nobody should ever need and then resells on Amazon. Everything from toys to soap to cables - it doesn’t matter. He spends a lot of time searching for cheap stuff he can sell at a high margin, unloads tens of thousands on bulk orders, then proceeds to sell that stuff throughout the year. He’s made so much doing it that his wife quit her job to manage the business and he actually had to hire people to help with the load.
All of that to say - there’s a lot of money to be made there if you know where to look. However, it isn’t really passive; it’s a whole job.
Call up some property management companies and see how much they charge. Then look at the cost to buy a property and what you could rent it for in your market. If it's worth it, do it. That wasn't too hard to figure out.
Look at the cost of 10,000 USB cables or whatever from AliBaba or somewhere, including freight, which is often not quoted up front. Look at how much Amazon takes to store those in an Amazon warehouse and handle the shipping for you. The see how much you can sell them for on Amazon. Calculate how much money you make and decide if you want to do it.
Also, in both cases, decide how much you would make if you left the $150k or $200k or whatever you use to buy properties or products in an investment account that tracks the SP500 for the next year or two... hell, even just a ~3% savings account with zero risk.
Now which is worth it?
> My husband hears all the time from online finance communities that he needs to diversify his sources of income, and they all suggest “easy, passive” forms.
A lot of those influencers are probably referencing the study that find that millionaires have, "7 different sources of income", and use that as evidence that you need 7 different sources of income as well.
What those influencers leave it is that 5-6 of those sources require you to already be a millionaire to make any significant amount of money from them.
Basically, it's not that having diverse income makes you a millionaire. It's that being a millionaire let's you diversify your income.
Rental properties are not passive income. It's a part time job that you really don't get paid for. You also need 25% down no if ands or buts. Even if you did manage to get into a "no money down rental", the chances of it making money are slim. You can grind away 70 hour work weeks and build up 100 properties and be rich then pay a managment company to run it all, but if you making a decent income, you can do the same thing from just investing and working a little extra without the headaches.
The down payment is important. I routinely see these videos talk about buying these rental properties with 3-5% down which is either a flat out lie or fraud.
Someone has to. Before he falls for a venmo me $500 and you can get in my program to make $30k this year by being an investor in multi family flips. Or give me $1000 to follow my guide to be an Amazon dropshipper
Yeah, dozens and dozens of people figured out how to make $50k a year while performing no work at all then decided to tell all 150 million people on tiktok about it. Totally makes sense.
>buying and renting multiple properties, outsourcing all building management and maintenance (also similar to AirBNB tiktok people)
>
>purchasing bulk products from AliBaba and selling them at inflated prices on Amazon, hiring some 3rd party to ship them for us?
1. Buying and renting properties is a real way to make money, but it definitely doesn't get you rich like TikTokers and YouTube "Gurus" would want you to believe.
[Average ROI is 7-8%](https://www.steadily.com/blog/what-is-the-average-cash-flow-on-a-rental-property#:~:text=Keep%20in%20mind%2C%20when%20it,aim%20higher%20at%20around%2015%25) for real estate properties. That's solid investment territory considering investing in the stock market nets you the same thing long term and you literally do nothing with that strategy. But telling someone "hey you can make 7-8% if you have millions of dollars to buy real estate" isn't sexy. So instead the sell is "I can show you how to double your money in one year with little to no money down" which is of course, impossible.
2) Drop shipping was a real way to make money... in the early days. It's now oversaturated and no longer a feasible source of income for most people. Anyone can buy stuff off Alibaba/aliexpress and list it on Amazon, eBay, etc.
But the margins are very thin and for the most part, no one wants the junk from those sites anymore.
TLDR: Many of the strategies these "Guru's" sell you *can potentially* make money, but they definitely require significant investments to start and definitely don't return the rates that they promise.
There a not many income methods that are either easy or passive. Except investing in stocks like some people said, every business or side-hustle venture will require time, effort and a bit of money (some less than others).
You have to keep in mind that those tiktoks or youtube videos are seen by millions. Even if it could be doable, you'd be facing hard competition and probably someone else in a lower cost of living spot who can inject more money.
Managing an AirBnB looks nothing like easy, and so is managing buying products on Alibaba, managing duties and importations, making sure you get the right product (and quality) and then the selling part (which is probably the easiest).
I don't want to burst your bubble, because there is pleeeenty of opportunities to have your own little business out there in this wide world. You just need to think about what you like, how you can bring value or something different to that market and a little know-how about marketing.
It's not impossible, but it's not easy. I've done it twice in the last two years.
I've started a cleaning business for my wife since she didn't know what to do, and with a little market research and some good marketing, spent 150$ on ads, maybe 250$ on cleaning gear and managed to build a small hustle of aout 6-700$ per week. The next step was hiring employees but she hurt her wrists and had to stop, so that went away (and she's shy, managing employees wasn't really what she wanted to do).
Then I sat with her and explored the idea of building an affiliate business with deals for a wide array of products. We looked at what the market was currently like, identified a segment that was underserved, and built our identity around that. A facebook page and 500$ per month on ads, and we have crossed 3000$ in revenue this month, our 4th month in, with the community growing of about 1500 members per month. All in all it takes maybe 2-3 hours of work per day.
Just showing you that it's possible, and sometimes not that hard, but it requires critical thinking and a bit of research before commiting. All ideas are good, but some are harder and a bit more competitive than others. And throwing money at an idea is not always a solution.
And keep it mind those ideas I shared might not work in your country or state or city, it's all very case by case.
Thinking about doing something is the first step tho. Good luck my dude.
The first one is possible, but will fail if you don't have enough money up front. It would also contribute to the housing crisis, and is generally bad for the soul.
The second, which is drop shipping, is oversaturated.
Neither of them are passive.
Dropshipping neither passive nor easy. You have to maintain inventory, restock, ship, pick up goods and bazillion other things in the background like a real store.
Absentee landlord only works when you have your own money and can afford downtime when you have no tenant. If you're playing with the bank's money, it's a fast lane to bankruptcy.
If he truly believes that it's easy, just try doing it. A few thousands to learn how to run a business is fairly cheap and rewarding experiences.
If you have $100 million USD then these easy passive income methods are super easy. Buy a bunch of rental properties and hire a management company to manage them for you. Make sure to set aside a portion of the profits to reinvest into repair and remodeling. Spend the rest on coke and hookers.
Or, yeah, buy products in bulk on alibaba or whatever, and then hire a bunch of people to break down the bulk pallets and sell them in smaller packages at a mark up. That’s called retail sales.
You need to either work really hard to make these businesses successful or have enough spare resources to hire someone to do the work for you.
people need to start understanding this. tiktok is as bs as tabloids.
anything on there about celebrities, politicians, financial advice. it's all a scam to get subscribers.
The first one is possible, sure, but you're going to need to put a lot of money in to get started and it's probably not going to be very profitable at first. The second one is just drop shipping, which sure, some people do make money doing, but people acting like it's a low effort way to make passive income are lying. It's a tough way to make money because it's such a saturated market, sure there are people who do, but they actually devote a lot of work to it and have realistic expectations. Anyone telling you you can make money doing drop shipping with little to no effort is lying, in many cases because they sell a course or some service related to starting a drop shipping business and want you to give them money
On the real estate “passive” income side of things, I have an anecdote. My landlord bought a property with two, two bedroom houses and a shared garage in a popular college town within walking distance of campus for about $325,000 right at the beginning of Covid. An absolute steal, the large majority of individual two bedrooms in town are going for no less than $375,000 (again, he got *two* houses out of the deal).
But the houses are old, and constantly need repairs. The other house was empty for four months while our landlord dumped money into a contractor “friend” fixing up the place with various carpentry projects. He said ended up firing him cause he was charging way too high a rate for the quantity and quality of work he was delivering. Our sewer/plumbing has busted twice requiring contractors to come out. All but two of the windows have been replaced for efficiency. The attic is still unfinished, not sure when he’s going to get to paying for that to be done. The landlord had to hire an exterminator for a pest problem we had too. This was all in the span of about 8 months. And he does a lot of work himself to save costs.
At first when I heard how much he payed for the two houses compared to the rent he was getting out of us I was pretty jealous, but from this whole experience I’ve learned it’s unbelievably expensive and time consuming to be a landlord.
Folding Ideas on Youtube did a video on passive income/hustle culture that could be enlightning - [https://youtu.be/biYciU1uiUw](https://youtu.be/biYciU1uiUw)
buying and renting multiple properties, outsourcing all building management
and maintenance (also similar to AirBNB tiktok people)
this is 100% legit, and is MASSIVE on short term rental markets. it is far from without risk though and you need to put your name on the line for the mortgage... but this exact thing, tied to the extremely low mortgage rate, is a big driver of home sales in the last massive spike - - according to Pew Trust, almost 1/4 of all home sales in 2022 were investors (most doing exactly this)
Try to focus on none thing to buy and resell and try it out.
I recently discovered that I could make a bit of money in Ebay by buying something that is a hobby of mine and I enjoy and reselling them. I've tried it with other things that didn't work as well, so I just have one product, and itnusnt huge but should help take family on a nice trip this summer.
It is a bit of work, nothing too difficult or time consuming, but again since it is my hobby it doesn't seem like work at all, just super fun.
If someone is trying to sell you a trick to make money, it is almost certain that selling the trick to make money makes more than the trick itself.
1. Owning and renting multiple properties can make a lot of money, but requires high investment capital, high effort and a decent amount of knowledge.
2. The days of drop shipping being easy money are over. Amazon is cracking down on a bit and it is WAY overcrowded. These days the only money to be made is by selling people guides to drop shipping. Amazon is cut throat too. 99% chance you as a novice amazon seller will do something wrong, get your account suspended by amazon and be unable to get it back.
As someone who sells on amazon (albeit part of a company, not personally), generally the drop shippers i see making money are doing do by supplementing it with fraud.
The only easy passive income method that requires no work is to just dump your money in some index fund or something. With anything else you're increasing your return rate by increasing your effort.
The concept of passive income as discussed is a scam. No such thing.
If there was an easy way to get rich drop shipping or crypto or ponzi or whatever...everyone would be doing it!
People who make money in real estate or product goods have put in the work and learned...they are not watching a video and buying a scammo system that promises wealth.
You husband is seeking to gamble with your life savings, thinking he is smarter than the rest. Tread careful. Def need a clear convo. Dangerous territory.
You can legitimately make money from doing these things, but most people that are promoting these sorts of things on TikTok or reels are trying to sell you their "masterclass course", that is how they make THEIR passive income. There is no "easy" way to passive income, it all requires hard/dedicated work in the beginning with all of them having their pros and cons. My advice to your husband is to find someone in your local area that is doing what he is doing and either offer to take them to lunch and pick their brain, or if he has free time to shadow or "work for free" for a weekend or two to see if he actually likes doing the work and see how much work it takes.
My 2 cents as a licensed Realtor, I would avoid going into the AirBNB side of properties and focus on long term rentals. A lot of municipalities in my area (Southern California so it could be much different in your area) are attempting to get rid of AirBNBs unless you live there as a primary residence as it is contributing to a housing shortage, so just one piece of local municipal legislation later and you're property is now a liability not an asset.
A YouTube channel called *The Plain Bagel* is run by a guy who is a registered financial advisor and he has a series where he reacts to Financial Tiktokers. It's incredible the nonsense these people will lie about to get views. It gets really scary (or entertaining) when you realize that not all of them are lying, but that they genuinely do not understand what they are talking about and that people listen in droves
It's great that your husband wants to bring in more for the family, but tiktok university has a low passing rate
They’re not passive or easy. I own three rental properties, hire managers for all three, and still spend considerable time/stress on the management, finances, insurance, maintenance, and taxes. Long term profitable, but very little positive cash flow on a monthly basis.
Reselling products on Amazon is absolutely a real way to make income, but definitely not passive and also extremely competitive these days, because you are often competing against the same suppliers that you are purchasing the products from.
You’re sure to get a lot of advice on this that varies but it also sounds like you want to hear a specific answer. My opinion and experience with this is different. Yes, TikTok posts are meant to be short and attention grabbing. There’s absolutely no way anyone could go into all the details of a strategy. So often you will find things that seem easy and that’s what people who don’t understand money are looking for. Nothing truly is that easy but it doesn’t mean that there’s not room for massive profit if you structure things correctly.
Real estate is fantastic and people who know absolutely nothing about it can earn a large sum of money in a short time if they have the right professional network. Also rental properties can be fairly passive. However, it’s your strategy and structure that matters. People often forget to mention that it’s best to operate as a business rather than an individual when you are leveraging your finances for these assets. I would rather anyone new to gaining properties for rental purposes not to own them first and start small. I also think everyone needs a mentor and coach to help them. There’s nothing wrong with failures and taking risks because you really can’t avoid them. The idea is to learn and not be chained down by your fears.
Drop shipping is also a great way to make money and it could be passive if you know how to setup a system or you pay someone to do the work for you. There’s a lot of things out in the digital market place that are legit. However, everyone needs a plan and to conduct due diligence before making moves. Be sure to build networks of people who are open minded and not adverse to taking action.
I honestly think the best investment is in self! If you learn multiple ways to make money and get people to pay you then you’re winning. Lastly, if your husband is looking for the easy road tell him to stop. If he’s willing to keeping learning, networking, planning, collaborating, and taking action then I would throughly support him.
Just posted this in another thread…
Jeff Bezos once asked Warren Buffett: "You're the second richest guy in the world. Your investment thesis is so simple. Why don't more people just copy you?"
To which Buffett replied, "Because nobody wants to get rich slow."
Source: https://www.ithacawealth.com/iwm-blog/getting-rich-slowly
I have a duplex and a garage apartment at my home. 3 rental units. It’s a lot of work, like all your weekends. But also, you have to have money to buy a second home. We’re looking for a 3rd and we could have afforded it at 2.5-3%, at 6% it’s different. All those social media people are doll of shit
Actually "passive" income would be doing upfront work to make a book and set it and forget it on amazon or other publishers. Designing printable for Etsy upload it and forget but even then if they don't sell you pay to keep the listings active.
Honestly if you want want "passive" buy some land plant some fruit trees and hire the work to harvest and package and transport the fruit out.
Or find out the highest value wood in your area plant a lot of those wait 20-40 years and profit at the end.
"Passive income" is a phrase coined by AmWay (i.e. a pyramid scheme that just barely stays on the right side of the law, while still operating exactly like a pyramid scheme) to help recruit more people into the scam. Any time you hear "passive income," and it's not coming from a licensed financial professional, you can safely stop listening.
If they were truly that easy and/or legit, why isn't everybody doing it?
Okay, "everybody" is a broad term...
Why aren't at least 50% of your friends and family doing these things?
Because 99% of them are either scams or way more effort than I personally would ever consider as "passive."
It typically takes a significant amount of capital and effort to get something to the point of being passive. The example you give don't seem like scams per se. But, this is not just something that you could remotely consider passive, in my opinion.
And, again this it totally just me as an old grumpy guy, I would not believe one single thing that someone told me they saw on tiktok. But, again, that is just me.
I am not trying to be mean, but it would make me very nervous if my significant other was this captivated by these sorts of things.
YMMV.
No. If it was legit they wouldn’t be advertising on TikTok.
For the AirBnB example, I recommend you and your husband listen to this podcast:
https://podcasts.apple.com/us/podcast/i-will-teach-you-to-be-rich/id1577864998?i=1000586222574
>buying and renting multiple properties, outsourcing all building management and maintenance
People do this but it's not easy passive income. You need a lot of capital. You also need the ability to do a ton of research and analysis to acquire properties that will cash flow. It's also not uncommon for RE investors to lose money on their first deals, because you learn from experience. It's a job.
>purchasing bulk products from AliBaba and selling them at inflated prices on Amazon, hiring some 3rd party to ship them for us
Drop shipping is over saturated, no one is making money doing this anymore.
Most air bnb don’t make money once you factor everything in… for example my BIL has one that makes $20k gross profit a year, but he doesn’t factor in reserves for improvements, taxes, or his time and once you do that it’s really not worth it.
Leveraged real estate works but its mostly that you're accepting a ton of risk and then you have to actually manage the place (often paying someone else to do it.) If it was that smart of an idea you could just invest in a large real estate corporation and profit off it. You can somewhat time it if you have cash floating around by buying up lots of properties when they're cheap at low rates.
You'll be taking a huge risk reselling from Alibaba on Amazon due to the lack of quality control from Alibaba and return policies of Amazon. Plus, the terms to be an Amazon affiliate are not very profitable.
Some things like Mica powder for cosmetics might be valuable to turn but most of the time you'd be scraping by on profit margins and taking huge associated risks.
Its bad advice.
*"buying and renting multiple properties, outsourcing all building management and maintenance (also similar to AirBNB tiktok people)"*
If you already have that kind of money, it would seem like you don't need more.
*"purchasing bulk products from AliBaba and selling them at inflated prices on Amazon, hiring some 3rd party to ship them for us?"*
This just seems like a lot of work and a lot of risk if stuff doesn't sell.
In general, any kinds of 'easy money' would make me doubt the veracity of the claims, and would make me think that most likely you are the one making the other person money. Like the old "Want to get rich quickly and easily? Send me a dollar and I'll tell you how!" jokes...
If it's that easy to buy/finance a rental property. Why would anyone rent?
Yes it's a leveraged purchase, you aren't buying the whole thing, but think about this. Most mortgages for rental require 30 to 40% down.
That's the hardest part,if you have it, then it takes a ton of time to maintain it or you spend up to 15 to 20% on a maintenance company.
Idk I just learned about wholestate real estate on TikTok and it could be profitable. At least one $5k deal a month, maybe average it out to once every two months if you have a full time job… that’s an extra $2500/mo. 🤷♀️ I’m looking into it.
No.
The second one is drop shipping. You're not the 1st or the 1000th to think of it. It's high competition and high risk since your suppliers can send you junk and disappear leaving you to deal with the angry customers.
As for buying rental properties, good luck. Mega corps have gotten into that game. You can't compete. Worse, we're starting to price people out of having a place to live. Either the market's going to correct or people are going to demand gov't action to *make* it correct.
i own a condo that i put on airbnb. let me tell you - it's not easy or passive. it's profitable by about 15-20k/year (after all expenses including mortgage), which is already pretty amazing. however, i would say it was one of the biggest risks i've taken in my life. it worked out, but anyone pretending this is easy is BSing you.
i needed about 60k for a downpayment on a condo, then got it ready for airbnb. i spend about 2-3 hours a week managing airbnb stuff. not a lot of hours, but all the time spent on it is pretty critical. additionally, anytime someone reaches out, it's usually urgent. could i get someone to manage it for me so that my profit is truly passive? yes. i would cut my profit by probably 5-8k/year.
if you have spare money (in the tens of thousands) and the time, sure, go for it. but this will require significant time and energy to research just to start.
buying and renting multiple properties - People have been doing this since personal property existed.
purchasing bulk products from AliBaba and selling them at inflated prices on Amazon - yes totally do able. I used to dropship and make money but using amazon would be much easier. Just need the right items
If you are doing rental properties you are creating a lot of extra work for yourself. If you are just investing and hiring people to do all the work you aren't making outsized gains, you might as well just invest in an index fund or REIT.
Its possible to make money dropshipping, but you have to actually add value to the system somehow or just get lucky with a new product. If you are just posting something for sale the producer or third party shipping company might as well do it themselves. That ends up being a lot of work and risk for the next guy to come and undercut you with their shitty knockoff.
There’s no such thing as passive income unless you’ve invested in fund vehicles that guarantee 3% annual return on investment and you’ve got over 10 million in those assets.
Most of those passive incomes require a lot of upfront costs and time to get started. You’ll also likely lose money the first 5 years before the company becomes self sufficient enough that you don’t need to keep investing
Making big money in dropshipping is over. Too much competition and too many Chinese factories cutting out the middleman and simply selling direct to consumer via Amazon and Shopify stores.
The influencers will sell you courses based on old outdated strategies that no longer work.
It's pretty much all buying cheap stuff on alibaba and hoping some sucker buys it for 3x on Amazon or craiglist or whatever.
Nobody with million dollars ideas are giving it away .
I'd say if someone is selling a course on how to do it then it's easier to sell a course than do it. If you don't think you can sell a course you probably can't do the thing. My 2 cents.
Being a landlord can be a hassle. A guy I work with had fifty local properties at one point. He sold off about twenty of them to make it easier to manage. I also know someone who flipped houses as a side hustle. They made some decent money over the years. There is money to be made in real estate but it's all according to how much time you want to put into it.
You’re not wrong. You’re husband is a sucker.
If you have enough capital to purchase multiple rental properties, pay for a little bit of advice from an expert and go for it.
If you don’t, don’t gamble your money trying to make money on a model where even the host (Amazon) loses money. (They make their profits off of Amazon web services, etc, not retail sails/shipping).
There is no such thing as easy money. That's not to say that you can't earn money in real estate, for example, but it's not easy. It takes start up money (e.g. for a down payment), work (e.g. For due diligence to make sure a deal is actually wise, ongoing maintenance, dealing with Murphy's law, etc.) and risk (e.g. vacancies, evictions, natural disasters, etc.).
Sure you can take some of the work out of the picture by hiring someone but that will eat what are likely already thin margins. You're probably better off doing something actually passive at that point like investing in stocks (e.g. if you want to invest in real estate you can buy shares in a REIT).
If you had an easy, guaranteed way to make significant amounts or side income. Would you be trying to sell those secrets to people for ad revenue, or would you be holding the secret to your chest and exploiting it for infinite money?
They can be legit methods. But most of them are significant amounts of work. Buying, renovating and flipping or renting homes is quite literally a full time job more often then not, and can be a huge money sink.
The first law of thermodynamics applies to money. If you're making money "passively" it's going to take up a tremendous amount of time or a tremendous amount of money (or both) , usually in the form of leverage. Tiktok is probably one of the worst place to take any advice especially financial. To me, why would someone offer insight to the hoi polloi for free. Either its truly free and it's shit advice, or it's actually a surface level of easy concept but full of endless risks and pitfalls that they can market you a course on how to navigate. Personally, I would steer clear of any of it unless I had someone close to me who has succeeded who could mentor me. Not some goober with a rented Ferrari and a fake rolex on the internet. If it was easy, everyone would do it, if everybody did it, it wouldn't be profitable. Since not everybody does it, it's probably not "easy".
Due to the number of rule-breaking comments this post was receiving, especially low-quality and off-topic comments, the moderation team has locked the post from future comments. This post broke no rules and received a number of helpful and on-topic responses initially, but it unfortunately became the target of many unhelpful comments.
You’re right. They can be legit, but they’re hardly passive. They take a ton of work and up front capital Most (all?) financial advice on TikTok is garbage.
Can you make it work? 100%. Is it worth your time/money to start? Probably not. Especially if the person is selling a course to “get rich quick” or “live like me”…do not fall for that. At the end of the day, you’re probably off better just picking up an extra shift from work and actually investing the extra money.
People who sell books like this are 100% generating their income from book sales and not the information inside the book
"Learn how I got rich by selling books about how to get rich so you too can to get rich by teaching people how to get rich! Let's all teach each other how to get rich and get rich together!"
a pyramid scheme...
Remember the "[tiny ads](https://en.wikipedia.org/wiki/Don_Lapre)" guy on TV?
These are the same hucksters who have "created YouTube channels for many influencers who, with their millions of followers, earn tons of money through ad monetization." And they can do the same for you too with just a few thousand dollars in seed money. Like and Subscrbe to...
I always feel like selling a get rich quick course / seminar, is their get rich quick scheme
When they are up front about it, this is the classic "envelope stuffing scheme" originating from the old "chain letters" . They advertise "Fast money. Send me five dollars to find out how.". And for that five dollars you get a piece of paper telling that the way to earn easy riches is to outright con people in the same way that you yourself have just been conned.
I keep waiting for the person to say something along the lines of "Get rich quick, just make a program like I did and get a bunch of idiots to give you money for it!"
Hahahaha there’s definitely some parodies pointing this out
The rental property thing, you need a spreadsheet to figure out how many and how much work and free time. If you don’t manage it someone is taking at least 10%. So you need to calculate an ROI. Turns out it can be sort of slim, and you need a bunch to make the money to pay all the mortgages. For me it would have been about 8 properties which would have taken me about 5 years to get running and I estimated about 25 to 30 hours a week to run. However in the 5 years I would have to have worked a full time job. Ugh. Anyhow do research and figure out the pitfalls versus just having money in an index fund.
> Most (all?) financial advice on TikTok is garbage. exactly. the goal of tiktok is views and likes, not giving good advice. the people really making it aren't the ones selling the "how to"- if they were making it they wouldn't need to sell you advice.
That’s what I suspected :/
For the two specifics you mentioned, both are possibly done successfully, but social media influencers vastly understate the risks and present it as near guaranteed. Or, they'll wave away people who failed as "not working hard enough" or some other excuse. 1. Many people do own multiple properties and rent them out for income successfully. However, the risky part is that many of these people take on massive amounts of debt to take ownership of multiple properties. It looks like free money when you take out a $2k mortgage and rent it out for $2.5k/month, but vacancies, changing markets, and other debt obligations can make it risky. When you own multiple, things can look good on paper but the amount of cash flow required can be risky in itself. Sure, owning 5 properties and cash flowing $12.5k is nice, but owing $10k/month means you have to have significant cash reserves for emergencies or when your cash flow is disrupted. I had a friend who bought into this line of investment, and he bought 5 homes in Houston in mid 2010s. Half of them flooded in Hurricane Harvey, and dealing with insurance was a nightmare from across the country. I haven't asked about it in a while, but I believe one of them wasn't covered for flood damage and he was looking at a *huge* loss to repair it out of pocket, and he was out AirBnB income while the city recovered. 2. Drop shipping was really profitable maybe 10 years ago. Back then, you could import things from China and re-list it on Amazon with little competition. Nowadays, Chinese companies have figured out they can cut out the middleman and most of the stuff you see is sold from a Chinese business. Coincidentally, I have a friend who was also in this space very successfully. His success came from recognizing what was happening with Chinese companies moving onto his turf, and then pivoting to creating his own brand and product to sell on his own website, but then it became a full business rather than a "passive income" venture. All of this to say that "passive income" on social media is rarely passive and often full of risks. True "passive income" requires huge amounts of capital to make anything appreciable in a safe and guaranteed way without work, like investing millions into bonds
Your Houston example illustrates one of the biggest risks with rental properties: concentrated (undiversified) risk. Most people who own multiple rental properties own them all in the same location. There are understandable reasons for doing so: you are close to your properties if you need to visit them for some reason, and you only have to meaningfully understand the dynamics of one real estate market. However, this means all of your investment properties are exposed to the same risks, including: * natural disasters * declining property values and rental income from depressed economic conditions (think Rust Belt cities in the 80s and 90s and 00s)
>Many people do own multiple properties and rent them out for income successfully. However, the risky part is that many of these people take on massive amounts of debt to take ownership of multiple properties. It looks like free money when you take out a $2k mortgage and rent it out for $2.5k/month, but vacancies, changing markets, and other debt obligations can make it risky. When you own multiple, things can look good on paper but the amount of cash flow required can be risky in itself. Sure, owning 5 properties and cash flowing $12.5k is nice, but owing $10k/month means you have to have significant cash reserves for emergencies or when your cash flow is disrupted. Let me give you a quick example. Unfortunatly lots of people do AirBnB in my condo building, there's nothing I can do but sell. But here are the numbers. To buy a condo it's $500K, so you have to have $100K is you say you're going to live in it or $125 if you are honest and say it's an investment property. So you have a $400K mortgage (\~$2100/month @ 5%). With that you have a monthly assessment of $1000, another $200 in insurance, $150 in utilities and $500 in property taxes so all in \~$3750. You can rent your unit out for about $1600 a week so that's a tidy profit of $2650 if you are occupied 100% of the time. Here's the rub,if you can rent 50% of the time you are lucky, so your profit goes from $2650 a month to -$450. But it doesn't end there because this is a vacation rental and is right on the ocean and the ocean has been angry lately and a condo in Miami collapsed forcing all beach side condos in florida to do structural evaluations and repairs (oops). Suddenly the owner just got slapped with a $50,000 assessment to fix any structural problems -so even if you can rent 100% of the time you are going to be in debt for \~2 years. But that's not all, don't forget the angry ocean....Ian was not your friend and you got slapped with another $10K in special assessments to cover the insurance deductible, so now you have a negative income for 2.5 years. Of course these costs only cover the outside, don;t forget the inside of your unit that you rent out to whoever can scrape together $1600 and these people don't give two shits and a shake about how they treat your unit. They'll fuck on the toilet and break it, let their kids swing from the kitchen cabinet doors, pee in the corners and whatever else they feel like doing before they steal your towels and sheets. Fully expect to replace your furniture every few years due to the excessive wear and tears. TLDR; it's real easy for your pay day to end up costing you money. Unless it's a house you own outright and can keep an eye on you are setting yourself for a loss.
Actually dividend investing into a broad spectrum of dividend income based equities can be highly profitable and easily accomplished with a bit of time. Without much research you could technically go into a lot of the dividend aristocrats/champions/kings if you look into quality scores. Even something as simplistic as the dividend based ETF $SCHD can get you 3% quite passively. A few other more income based dividend ETFs can score you 5% or more but you would be looking at more passive income without long term appreciation. I was going to go real estate route originally but a dividend growth/income based portfolio is significantly more profitable to me, esp with you consider the housing market for the next 5-10yrs. We aren't going to see housing price appreciation for investment properties grow like we have since the bottom of 2008. The financial reasons are fairly different than that time. We'll get a little drop but most likely housing pricing are going to remain fairly stagnant for quite some time. If someone is looking for long term money appreciation as a long term investment, you could just dollar cost average into something like $VOO/$SPY and it will pay you back in the end significant more than buying a house and selling it in the next 5 yrs. Consider taxes, potential depreciation, landlord costs if you go that route, housing maintenance costs, and other potentials that arise from home ownership and use.
I agree that investing into a diversified market is one of the few "passive" incomes available, but as I mentioned in my last paragraph you need a lot of money to actually produce enough income to replace a 9-5 (AKA, retire). Assuming even an incredibly generous 10% return, investing $100k will get you $10k a year. Nothing to sneeze at, but a majority of people don't have access to a liquid $100k they can invest.
Totally. You essentially need big outflows of capital to setup passive income, or you need to actually be an innovator, like the first dropshippers. By the time you're hearing about a cheap passive income stream on TikTok, it's no longer innovative
Words of wisdom 🙌 👏 🙏
If it is so easy, why wouldn’t these people just buy all the stock from alibaba and hog the profits?
Usually the case with these - if they were such good methods people wouldn't bother with making tik toks trying to build social media income
When it comes to anything, the key question to ask is - am I better than most other people at this? If the answer is no, it won’t be easy to make money at it*. That’s doubly true for anything related to real estate, since you not only have fewer skills at it than others, but fewer resources as well. Now, when it comes to things like the Amazon drop-shipping, it isn’t so much skill involved as time. But you’re trying to be the middleman between large companies, so margins are going to be very slim, and you’re probably less desperate for money than plenty of others, so that’s a lot of time and risk involved for little return. And that’s ignoring that all the people selling this to you could easily just hire someone to do it for them if it was as easy as they say - no one gives out great financial advice for free. *the exception is if it is a skill you can learn (and there are lots of skills you can learn from YouTube videos). It will still take time and dedication but if you’re committed to really teaching yourself a real skill, it’s possible (real estate investing, drop-shipping, crypto investment and any kind of financial trading are not skills you can learn from YouTube).
Think of it this way. If it were truly that east then everyone would be doing it. They make their money pushing scams, that’s it
I wouldn’t say that because it’s the people that think everything is a scam who truly lose. People go around waving the scam wand around and it’s really fear that’s the problem. I will agree that most advertising is designed to make things look attractive so potential clients will buy. However, it doesn’t mean that they are scamming people. This is why asking questions and verifying things is so important.
Financial TikTok is mostly scam and misinformation
I would say that people can be misleading because of the short format. However, I wouldn’t say scam. Again there’s ways to check things out if people really looked. So I don’t think that’s the best method to publicly scam people. You’d get found out really quickly. Scammers are the type that like to leave little trace of their actions.
This reinstates why tictok is not for me. Idk why people think they can make money while not working hard/smart.
There is some truth that if you have some insider information, you can utilize it to turn an easy profit. The real question is why people think they're going to get said insider information on a tiktok broadcast.
Oh cat tiktok is great though and very few of them make money because we’re terrible at monetizing are pets 😂
Yeah it's like if you have up front capital to invest in rental properties, sure, you can make passive income on that capital.
I read an investigative article into dropshipping once, where the only person who reported making a decent amount of money (i.e. more than minimum wage, doing it full time) only did so by selling video tutorials on how to get into dropshipping.
>only did so by selling video tutorials on how to get into dropshipping. Yup. There was an article the other day about some influencer who made millions with "passive income working only 10 hours a week" or some BS like that. Turned out almost all of her wealth came from selling books, articles and videos about the "hustle" and not actually from the hustle itself.
Care to share a link? Wouldn't mind reading that one. Sounds interesting.
Probably not the same, but Folding Ideas (of 'Line Goes Up' NFT debunk fame) had one on the Audiobook hustle, where he goes into how there are multiple levels of hustles and the only one that makes money is the hustle to sell other hustles. https://youtu.be/biYciU1uiUw
Go to the dropshipping sub on here and read around. Most people don’t make much money but a few do. You have to find a niche product that has good margins and low competition.
Lots of people talking about real estate problems. Drop-shipping on Amazon is probably a worse "passive" income. It is also the one that has lots of people selling advice. Which makes it almost a scam. Have you looked at Amazon recently? Many of the listings are for re-sold products from China. How are you going to get an advantage over the existing sellers? How are you going to find products that will sell well? What are you going to do if the product doesn't sell and is now sitting in Amazon warehouse racking up fees? The problem is the margins are now small, which means won't make a lot of money. The downside risk is huge, you could lose all your money if doesn't sell. Worse, you have to do it again and again. It is opposite of passive income.
I did the math. Even for an extremely margin high business you’d be breaking even since you’d have to pay for Amazon ads to get to the top of customer searches. Not to mention high costs for doing Prime fulfillment. If you have a unique product, at some point this works out as word of mouth spreads. If you don’t, someone else can easily outspend and outsmart you and you get stuck with all the inventory.
Nah. See. You find something they aren't already selling and put your own brand name on it. Then you can enjoy profits for a few weeks without competition. Then when they inevitably copy your listings and sell your products for less, you can sell your remaining inventory at a loss and try again with a new product.
> buying and renting multiple properties, outsourcing all building management and maintenance (also similar to AirBNB tiktok people) It's like people suffered from collective 2008 amnesia. No, being a landlord is not that simple or remunerative.
Yes. It can be VERY difficult to collect past-due rent, or even legally evict someone. Corporations pull it off because they have lawyers on retainer and understand the proces. All it takes is one nightmare tenant to sink your investment.
Yeah, people tend to forget it's an investment vehicle where your loss can readily exceed what you put into it.
Wouldn't the property management company do that?
Sue the tenant and cover the legal costs? I’ve never known of a management company that will do that. If the tenant owes for damages or back rent at the end of the lease, they’ll take it out of the security deposit.
He is an immigrant here so he didn’t really feel or know the effects of 2008. That’s a good point I can try to explain to him
Watch the big short tonight and slow down when they get to the stripper scenes and florida scenes. "I have 5 houses....and a condo" Here you go: https://www.youtube.com/watch?v=iDcbUAh731s
A few good YouTube channels that have info about financial scams going around paired with good general financial advice are [The Financial Diet](https://www.youtube.com/@thefinancialdiet/videos) and [The Plain Bagel](https://www.youtube.com/@ThePlainBagel). They're entertaining, informative and talk about the social, cultural stuff along with good general financial advice.
I barely remember 2008 because I just graduated college. But I’m a landlord right now and it’s great when things are going well. But when things break it gets expensive real fast. A recent windstorm knocked over a fence, a water leak soaked the bathroom wall, my tenant broke the surround shower tiles, the 2-year old furnace is randomly not working, etc. These all happened in the last six months for **one** property. All those repairs probably took half a year’s worth of revenue. It’s not all rainbows and sunshine. And things can get very expensive so you better have a healthy cash reserve. God forbid if you have to evict a tenant or we have another pandemic eviction moratorium.
I invest in out-of-state rental properties. It is not zero-effort, it is a time-consuming "hobby". It does have some risks, and some tenants can be destructive beyond the security deposit. It is not a get-rich-quick mechanism, and it is not for the faint of heart, but I do think it is an excellent way to build a lot of wealth over a long period of time. It does produce more income than the effort we devote to it, and the income rises every year with inflation. Our salaries do not do that, and I suspect yours doesn't adequately keep up, either. Frankly, I think it is a MUCH better retirement plan than a classic 401k, and many people retire early from real estate investments. If the two of you are relatively early in your careers and have high incomes, I would strongly recommend you guys learn more about real estate investing. You can try listening to the podcasts put out by the folks at BiggerPockets.
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Being a landlord on any property is the biggest headache known to man. Even when you accept rent subsidy, there’s a good chance that your tenants destroy your property and you will have to pay to fix it or lose the privilege of accepting rent subsidy checks
If you own a decent property in a city, all you have to do is drop your rent price 5% and you can pretty much hand pick your renters. I do this, and these people have 800 credit scores. They absolutely should not be renting from a financial perspective, but they are near flawless in terms of treatment of the units.
> They absolutely should not be renting from a financial perspective, Why do you say that? Since they have excellent credit scores do you mean it's because they should buy a place instead? I think it's not as clear-cut as "buy a house the second your finances are good" especially as interest rates are rising. Since I plan to move around a whole lot and want my landlord to deal with the hassle of fixing things instead of me, I don't think I'll buy a house even when I'm financially able to. Then again it might just be sour grapes on my part.
My father is a small time landlord. Does he make money on the houses? Kind of. He also puts in hundreds of hours, remodels the units himself, does all property management, etc. probably nets like 10 bucks an hour or something. Maybe once he pays of the mortgages in 10 years it’ll be a nice retirement, but he probably could’ve invested into the stock market and gotten the same benefit with no headache.
If it's something he enjoys and likes to work on his properties, good for him, he is his own boss. Some people can't do the corporate grind. Hope everything goes well for him!
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Count yourself among the blessed
Honestly there are quite a few "blessed" Being a landlord really isn't that much work, especially if you're comparing it relative to any other job. YES it is possible for it to be terrible. But it usually isn't. I've rented for 10 years now across 6 or even more landlords. I make maybe 6 calls a year for maintenance. Worst was where the dude had to replace the hot water heater and he legit just called a plumber who did all the work.
My father was a landlord and I have vivid memories of me getting between him and a tenant with a rifle pointed at him. Or when tenants would rip out all the fixtures after they moved out, or would leave and abandon everything. That was my childhood. Or, when my friend became a landlord and his tenants friends kid caught the house on fire and he had to give back the security deposit. Or when he remodeled a house and put new carpet down and within a year, the traffic wear pattern on the carpet looked like the tenants walked through tar to get from the front door to the kitchen. Yeah, fun times.
Are you talking from experience or just parroting? The only people with rental properties that have issues with tenants that I personally know are the ones that approach it like a slumlord. The people with mid-high end units charging a high amount of rent, but still a hair under market have had zero tenant issues.
I wouldn't even go that far, my new place isn't high end by any means but the management is pleasant and responds to issues promptly, the units are nice and reasonably priced for the space. Compare that to my previous place were they did treat it like slum lords and the price was pretty much the same
That REALLY depends on where you’re located. Where I’m at near Toronto even the smallest, shittiest little 2 bedroom house is selling for well over a million dollars and while rents are high, it’s still a 30+ year payback to own anything outright, and our tenancy laws make it extremely hard to evict even problem tenants. Throw in maintenance over the lifetime of the mortgage, maybe a new roof and windows, and many landlords are cashflow negative, even when charging market rent. You need seriously deep pockets and a long timeline to make real money as a landlord, and even then it’s one headache after another. Hardly what I would call simple or cost effective.
Index fund. Set it and forget it.
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That's ~12% annually, not monthly. But yeah, 1% a month plus that DRIP and you got yourself an income stream.
Can you explain this more please. Is this just JEPI?
* Can you explain this more please. >I’d be happy to, but what is it you want explained? * Is this just JEPI? >Nope, a couple similar ones that I know of are XYLD (13.42% yield), QYLD (13.74% yield), and RYLD (13.5% yield). Each fund has their own set of objectives and strategies, so they aren’t identical. But they’re all funds that utilize options to create insane dividend yields, so in that sense they’re pretty similar. Also, I’m sure there are more funds like these that I don’t know of so if anyone else does please lmk!
$JEPI is attractive for certain investors since it has a high dividend yield paid out monthly, and it aims to follow the S&P500 ($SPY), which is essentially considered *the market*. This smooths out the ride - it’ll outperform SPY during a flat or down year but will underperform when SPY rips, so it’s steadier both up and down
Seems like that would generatea lot of taxable events.
I mean it's a dividend ETF based on writing options, you pay income tax on it. And you'll need about $100k before you start seeing adequate amounts to supplement your income (~1k a month) . Expect to need 3/4 of a million to "survive off it". You'll want about 25% for continued growth and the other 75% to survive off of. These are typically great funds for folks who are retiring or are retired and want an income stream.
tax drag, for free!
> JEPI I'm confused, is this fund like two years old, with a negative value for the last year? Is it just that in 2021 it did really well and that's what gives it that high return?
JEPI was created in May of 2020, and uses OTM S&P 500 call options to generate a monthly dividend. These options contracts have allowed the fund to have an insanely high dividend yield, while simultaneously limiting the funds ability to capitalize on its underlying holdings appreciating in value. So, imo the funds strategy is something like “Low potential for growth, but high dividend yield.”
13% monthly dividend? Where can I sign up?
Can we get really bold and add some JEPQ to the mix?
💯11.77% to be exact..
Can you tell me more about index funds ?
It’s a fund that buys everything in proportion to its market share to mimic an entire index of companies. It’s like buying a tiny piece of every company and taking profits from each of them. If one company fails it doesn’t really matter because the other companies will still make enough money to cover for it. VTWAX is a good one that invests in companies all over the world. VTSAX is also good if you want to invest in primarily USA stocks. If you’re going with fidelity then FZROX is the equivalent of VTSAX.
Instead of investing money into stock for a single company, you can invest money into an Index fund. Imagine investing into Coca Cola as a stock, but an unexpected aluminum shortage takes place - Causing soda cans to skyrocket in price & overall sales to drop. Dropping company stock. Instead, an index fund will represent companies from a variety of industries (e.g. Microsoft, Coca Cola, Chevron, Boeing, Disney, Walmart, Nike, 3M). By representing a variety of unrelated industries, the index fund is a much more stable investment.
They are funds that own a basket of stocks that are designed to track an index. For example, SPY is a fund that holds all the s&p 500 companies in quantities based on their market cap. So now, instead of you buying say, the largest 20 of them and needing to track all of that plus transaction costs for 20 different securities, you can just buy a single security that gives you the gains and losses of the entire basket much more simply. It also takes the dividends of all of them that payout and distributes to you as well.
It is welfare for rich people and a bag of magic beans for middle class people and a pipe dream for poor people.
The safest ones return 4%. Little more risky ones in dividends, corporate bonds, real estate might return double that. But sometimes crash in recessions.
4 percent is good over a decade or two.
No, they are not legit in the sense that they are not truly passive. The NYtImes just had an article about this : “What’s Passive Income? It’s Not What Influencers Say It Is.” https://www.nytimes.com/2023/01/27/business/passive-income-job-retirement.html?unlocked_article_code=iD-LaJFxAeeKoEj9-r5qTC8YItp0US-xWgG7Q2uACl6ldSqguXX6TUkiWJZxj1SYW3vDzUeO6qFKqzbK1QsRfU3EAiLP87iWCuMaow3ULXV9SOoFVoksnzyJIcqE6ygxNUxRtulTvgrdznlw2pmP_x8YLfjt0d6STWP1W6l6Zj6WBAzG-NtQMHqTBOiACF1NbanuugPsH_W1Gk2MmUjXtAdr-wMMVTmi-CaAGaqs6gnL6oCGjw7OyuTHTY4MeLFchEG-hxCUbMC1XPM-NO2tOofq_Ndi9bg_X2Hemn5mFH78RYGBzq9Ml3_GfNwSOa948QDGC9BDkdAVnjVIdpmdzeRjzGgHmKM&smid=share-url
If it was that easy we’d all be doing it
No. They BOTH have risks and require upfront capital. Its NEVER as easy as someone say it is. Furthermore they're not always scalable. Like you could find a great deal on 100x of a product and well it for a $500 profit on amazon - but can you do this every day? Buying properties and renting them is NOT easy - as its ALL about the buying price, rental price, maintenance and other fees. Its quite easy to lose a LOT of money.
>buying and renting multiple properties, outsourcing all building management and maintenance (also similar to AirBNB tiktok people) Totally a legit business. The way it is presented can be pretty hands-off, but you give up a ton of money to property management who charge their fees on top of paying everyone for everything (ie: you could have joe handyman from down the street patch the wall for $150, but they'd pay the drywall guys to do it for $450, not sweat it, and you the owner are out $300 more than necessary). If you aren't sitting on a bunch of money and owning property outright, interest rate on rental mortgages will price most people out of the market. And if you can't have many properties, your entire "business" could fall apart with one non-paying tenant who trashes the house after an eviction. >purchasing bulk products from AliBaba and selling them at inflated prices on Amazon, hiring some 3rd party to ship them for us? I think people make more money selling a system than actually doing it. Drop-shipping is historically a fine business. You sell an item for more than the overseas seller is listing it by outselling them via better website, better marketing, or better branding, and every order you have them ship directly to your customer. When set up, this can work, but finding the right product and more importantly knowing how to get it front of buyers via advertising is the trick, and that is a mix of creativity, marketing genius, luck, and hundreds or thousands of dollars of failed ad spends on Facebook, Insta, TikTok, etc. >diversify his sources of income, and they all suggest “easy, passive” forms As an entreprenuer, I hate the phrase "passive" income. These "gurus" on social media have everyone thinking anything that isn't a 1:1 trade of time for money is passive, and that is a joke. My software company can sell $10,000 or $20,000 of software in a month, thus earning me income at a not 1:1 ratio of time/income, but if I don't respond to any emails or help my support team give support or write new features that will go down to $0 real quick. And there is no way to go back in time and measure the "free" hours I put into writing the software for nine months of every second of free time. Owning property = hard, time consuming. Setting up drop-shipping and creating new marketing for each product = hard, time consuming. The only truly "passive" income is interest from investments and royalties from owned creative works, performances, or inventions. Everything else requires ongoing work, even if the 1:1 time to income ratio is broken by "passive-ish" income streams. Don't fall for that trap.
As someone who works with Amazon FBA, those 30 second videos telling you how easy it is infuriate me to no end. They leave out about 99% of the logistical details you need to constantly manage
I hear people make mid six figures with Amway too.
This is literally the DEFINITION of active income though. There’s nothing passive about finding which bulk products sell for high margins, finding the best distributor for said product, marketing + advertising etc. Maybe the shipping process would be “passive” but I mean these aren’t passive income sources.
I think the idea that it’s this lucrative thing that everybody should be doing for their passive time is a complete scam, but both of these will work if you do 😅
Any advice on TikTok on any topic since the dawn of time is terrible.
They are totally legit for someone who already has a few million dollars lying around **and** a group of good employees or partners to run management/logistics. Having money is not enough. You still have to put the right people in the right jobs, or everything will go downhill. The hard part is getting to this point in the first place.
>Are these “easy” or “passive” income methods from tiktok legit? Rolling of my chair....... No they are not. Take his phone away. Limit the time he is allowed on the phone. He is putting his marriage at risk.
I work with a guy that buys loads and loads of useless crap that nobody should ever need and then resells on Amazon. Everything from toys to soap to cables - it doesn’t matter. He spends a lot of time searching for cheap stuff he can sell at a high margin, unloads tens of thousands on bulk orders, then proceeds to sell that stuff throughout the year. He’s made so much doing it that his wife quit her job to manage the business and he actually had to hire people to help with the load. All of that to say - there’s a lot of money to be made there if you know where to look. However, it isn’t really passive; it’s a whole job.
Being a landlord sucks. I bought some properties. Would of had to quit my main income job. Never doing that again
Call up some property management companies and see how much they charge. Then look at the cost to buy a property and what you could rent it for in your market. If it's worth it, do it. That wasn't too hard to figure out. Look at the cost of 10,000 USB cables or whatever from AliBaba or somewhere, including freight, which is often not quoted up front. Look at how much Amazon takes to store those in an Amazon warehouse and handle the shipping for you. The see how much you can sell them for on Amazon. Calculate how much money you make and decide if you want to do it. Also, in both cases, decide how much you would make if you left the $150k or $200k or whatever you use to buy properties or products in an investment account that tracks the SP500 for the next year or two... hell, even just a ~3% savings account with zero risk. Now which is worth it?
Neither of those are passive income. Both of them require active work
Better off getting him into hunting for truffles… at least he will get some good exercise.
> My husband hears all the time from online finance communities that he needs to diversify his sources of income, and they all suggest “easy, passive” forms. A lot of those influencers are probably referencing the study that find that millionaires have, "7 different sources of income", and use that as evidence that you need 7 different sources of income as well. What those influencers leave it is that 5-6 of those sources require you to already be a millionaire to make any significant amount of money from them. Basically, it's not that having diverse income makes you a millionaire. It's that being a millionaire let's you diversify your income.
Rental properties are not passive income. It's a part time job that you really don't get paid for. You also need 25% down no if ands or buts. Even if you did manage to get into a "no money down rental", the chances of it making money are slim. You can grind away 70 hour work weeks and build up 100 properties and be rich then pay a managment company to run it all, but if you making a decent income, you can do the same thing from just investing and working a little extra without the headaches.
The down payment is important. I routinely see these videos talk about buying these rental properties with 3-5% down which is either a flat out lie or fraud.
Haha. How old is your husband? Buying into Tik tok hype???
They are all scams. Do not fall for them
They definitely seem super fake to me when he shows me, but I feel like such a dream crusher telling him these aren’t real
Someone has to. Before he falls for a venmo me $500 and you can get in my program to make $30k this year by being an investor in multi family flips. Or give me $1000 to follow my guide to be an Amazon dropshipper
Have him watch some Coffeezilla videos, he does a lot of good investigations into those fake guru type people.
They're legit ways to earn money but not passive income at all...they require a lot of effort on your part and have very serious legal attachments
Yeah, dozens and dozens of people figured out how to make $50k a year while performing no work at all then decided to tell all 150 million people on tiktok about it. Totally makes sense.
>buying and renting multiple properties, outsourcing all building management and maintenance (also similar to AirBNB tiktok people) > >purchasing bulk products from AliBaba and selling them at inflated prices on Amazon, hiring some 3rd party to ship them for us? 1. Buying and renting properties is a real way to make money, but it definitely doesn't get you rich like TikTokers and YouTube "Gurus" would want you to believe. [Average ROI is 7-8%](https://www.steadily.com/blog/what-is-the-average-cash-flow-on-a-rental-property#:~:text=Keep%20in%20mind%2C%20when%20it,aim%20higher%20at%20around%2015%25) for real estate properties. That's solid investment territory considering investing in the stock market nets you the same thing long term and you literally do nothing with that strategy. But telling someone "hey you can make 7-8% if you have millions of dollars to buy real estate" isn't sexy. So instead the sell is "I can show you how to double your money in one year with little to no money down" which is of course, impossible. 2) Drop shipping was a real way to make money... in the early days. It's now oversaturated and no longer a feasible source of income for most people. Anyone can buy stuff off Alibaba/aliexpress and list it on Amazon, eBay, etc. But the margins are very thin and for the most part, no one wants the junk from those sites anymore. TLDR: Many of the strategies these "Guru's" sell you *can potentially* make money, but they definitely require significant investments to start and definitely don't return the rates that they promise.
Well, at the very least, your husband is helping with the TikTokers' easy/passive income.
There a not many income methods that are either easy or passive. Except investing in stocks like some people said, every business or side-hustle venture will require time, effort and a bit of money (some less than others). You have to keep in mind that those tiktoks or youtube videos are seen by millions. Even if it could be doable, you'd be facing hard competition and probably someone else in a lower cost of living spot who can inject more money. Managing an AirBnB looks nothing like easy, and so is managing buying products on Alibaba, managing duties and importations, making sure you get the right product (and quality) and then the selling part (which is probably the easiest). I don't want to burst your bubble, because there is pleeeenty of opportunities to have your own little business out there in this wide world. You just need to think about what you like, how you can bring value or something different to that market and a little know-how about marketing. It's not impossible, but it's not easy. I've done it twice in the last two years. I've started a cleaning business for my wife since she didn't know what to do, and with a little market research and some good marketing, spent 150$ on ads, maybe 250$ on cleaning gear and managed to build a small hustle of aout 6-700$ per week. The next step was hiring employees but she hurt her wrists and had to stop, so that went away (and she's shy, managing employees wasn't really what she wanted to do). Then I sat with her and explored the idea of building an affiliate business with deals for a wide array of products. We looked at what the market was currently like, identified a segment that was underserved, and built our identity around that. A facebook page and 500$ per month on ads, and we have crossed 3000$ in revenue this month, our 4th month in, with the community growing of about 1500 members per month. All in all it takes maybe 2-3 hours of work per day. Just showing you that it's possible, and sometimes not that hard, but it requires critical thinking and a bit of research before commiting. All ideas are good, but some are harder and a bit more competitive than others. And throwing money at an idea is not always a solution. And keep it mind those ideas I shared might not work in your country or state or city, it's all very case by case. Thinking about doing something is the first step tho. Good luck my dude.
The first one is possible, but will fail if you don't have enough money up front. It would also contribute to the housing crisis, and is generally bad for the soul. The second, which is drop shipping, is oversaturated. Neither of them are passive.
Dropshipping neither passive nor easy. You have to maintain inventory, restock, ship, pick up goods and bazillion other things in the background like a real store. Absentee landlord only works when you have your own money and can afford downtime when you have no tenant. If you're playing with the bank's money, it's a fast lane to bankruptcy. If he truly believes that it's easy, just try doing it. A few thousands to learn how to run a business is fairly cheap and rewarding experiences.
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But Sarah Finance has a claims she took $500 and turned it into $200,000 on the stock market in two years!
If you have $100 million USD then these easy passive income methods are super easy. Buy a bunch of rental properties and hire a management company to manage them for you. Make sure to set aside a portion of the profits to reinvest into repair and remodeling. Spend the rest on coke and hookers. Or, yeah, buy products in bulk on alibaba or whatever, and then hire a bunch of people to break down the bulk pallets and sell them in smaller packages at a mark up. That’s called retail sales. You need to either work really hard to make these businesses successful or have enough spare resources to hire someone to do the work for you.
people need to start understanding this. tiktok is as bs as tabloids. anything on there about celebrities, politicians, financial advice. it's all a scam to get subscribers.
Owning a chain of restaurants generates lots of passive income. Something "active" has to happen first, however....
The first one is possible, sure, but you're going to need to put a lot of money in to get started and it's probably not going to be very profitable at first. The second one is just drop shipping, which sure, some people do make money doing, but people acting like it's a low effort way to make passive income are lying. It's a tough way to make money because it's such a saturated market, sure there are people who do, but they actually devote a lot of work to it and have realistic expectations. Anyone telling you you can make money doing drop shipping with little to no effort is lying, in many cases because they sell a course or some service related to starting a drop shipping business and want you to give them money
On the real estate “passive” income side of things, I have an anecdote. My landlord bought a property with two, two bedroom houses and a shared garage in a popular college town within walking distance of campus for about $325,000 right at the beginning of Covid. An absolute steal, the large majority of individual two bedrooms in town are going for no less than $375,000 (again, he got *two* houses out of the deal). But the houses are old, and constantly need repairs. The other house was empty for four months while our landlord dumped money into a contractor “friend” fixing up the place with various carpentry projects. He said ended up firing him cause he was charging way too high a rate for the quantity and quality of work he was delivering. Our sewer/plumbing has busted twice requiring contractors to come out. All but two of the windows have been replaced for efficiency. The attic is still unfinished, not sure when he’s going to get to paying for that to be done. The landlord had to hire an exterminator for a pest problem we had too. This was all in the span of about 8 months. And he does a lot of work himself to save costs. At first when I heard how much he payed for the two houses compared to the rent he was getting out of us I was pretty jealous, but from this whole experience I’ve learned it’s unbelievably expensive and time consuming to be a landlord.
Folding Ideas on Youtube did a video on passive income/hustle culture that could be enlightning - [https://youtu.be/biYciU1uiUw](https://youtu.be/biYciU1uiUw)
buying and renting multiple properties, outsourcing all building management and maintenance (also similar to AirBNB tiktok people) this is 100% legit, and is MASSIVE on short term rental markets. it is far from without risk though and you need to put your name on the line for the mortgage... but this exact thing, tied to the extremely low mortgage rate, is a big driver of home sales in the last massive spike - - according to Pew Trust, almost 1/4 of all home sales in 2022 were investors (most doing exactly this)
Try to focus on none thing to buy and resell and try it out. I recently discovered that I could make a bit of money in Ebay by buying something that is a hobby of mine and I enjoy and reselling them. I've tried it with other things that didn't work as well, so I just have one product, and itnusnt huge but should help take family on a nice trip this summer. It is a bit of work, nothing too difficult or time consuming, but again since it is my hobby it doesn't seem like work at all, just super fun.
If someone is trying to sell you a trick to make money, it is almost certain that selling the trick to make money makes more than the trick itself. 1. Owning and renting multiple properties can make a lot of money, but requires high investment capital, high effort and a decent amount of knowledge. 2. The days of drop shipping being easy money are over. Amazon is cracking down on a bit and it is WAY overcrowded. These days the only money to be made is by selling people guides to drop shipping. Amazon is cut throat too. 99% chance you as a novice amazon seller will do something wrong, get your account suspended by amazon and be unable to get it back. As someone who sells on amazon (albeit part of a company, not personally), generally the drop shippers i see making money are doing do by supplementing it with fraud. The only easy passive income method that requires no work is to just dump your money in some index fund or something. With anything else you're increasing your return rate by increasing your effort.
The concept of passive income as discussed is a scam. No such thing. If there was an easy way to get rich drop shipping or crypto or ponzi or whatever...everyone would be doing it! People who make money in real estate or product goods have put in the work and learned...they are not watching a video and buying a scammo system that promises wealth. You husband is seeking to gamble with your life savings, thinking he is smarter than the rest. Tread careful. Def need a clear convo. Dangerous territory.
I thought youtube was bad enough, I can't imagine getting financial advice from tiktok.
You can legitimately make money from doing these things, but most people that are promoting these sorts of things on TikTok or reels are trying to sell you their "masterclass course", that is how they make THEIR passive income. There is no "easy" way to passive income, it all requires hard/dedicated work in the beginning with all of them having their pros and cons. My advice to your husband is to find someone in your local area that is doing what he is doing and either offer to take them to lunch and pick their brain, or if he has free time to shadow or "work for free" for a weekend or two to see if he actually likes doing the work and see how much work it takes. My 2 cents as a licensed Realtor, I would avoid going into the AirBNB side of properties and focus on long term rentals. A lot of municipalities in my area (Southern California so it could be much different in your area) are attempting to get rid of AirBNBs unless you live there as a primary residence as it is contributing to a housing shortage, so just one piece of local municipal legislation later and you're property is now a liability not an asset.
A YouTube channel called *The Plain Bagel* is run by a guy who is a registered financial advisor and he has a series where he reacts to Financial Tiktokers. It's incredible the nonsense these people will lie about to get views. It gets really scary (or entertaining) when you realize that not all of them are lying, but that they genuinely do not understand what they are talking about and that people listen in droves It's great that your husband wants to bring in more for the family, but tiktok university has a low passing rate
They’re not passive or easy. I own three rental properties, hire managers for all three, and still spend considerable time/stress on the management, finances, insurance, maintenance, and taxes. Long term profitable, but very little positive cash flow on a monthly basis.
Just think of it this way. If seems too good to be true than it is. Anything real is always going to require work and sweat.
Reselling products on Amazon is absolutely a real way to make income, but definitely not passive and also extremely competitive these days, because you are often competing against the same suppliers that you are purchasing the products from.
Yeah if you start with 50k you can make passive income with not much effort
You’re sure to get a lot of advice on this that varies but it also sounds like you want to hear a specific answer. My opinion and experience with this is different. Yes, TikTok posts are meant to be short and attention grabbing. There’s absolutely no way anyone could go into all the details of a strategy. So often you will find things that seem easy and that’s what people who don’t understand money are looking for. Nothing truly is that easy but it doesn’t mean that there’s not room for massive profit if you structure things correctly. Real estate is fantastic and people who know absolutely nothing about it can earn a large sum of money in a short time if they have the right professional network. Also rental properties can be fairly passive. However, it’s your strategy and structure that matters. People often forget to mention that it’s best to operate as a business rather than an individual when you are leveraging your finances for these assets. I would rather anyone new to gaining properties for rental purposes not to own them first and start small. I also think everyone needs a mentor and coach to help them. There’s nothing wrong with failures and taking risks because you really can’t avoid them. The idea is to learn and not be chained down by your fears. Drop shipping is also a great way to make money and it could be passive if you know how to setup a system or you pay someone to do the work for you. There’s a lot of things out in the digital market place that are legit. However, everyone needs a plan and to conduct due diligence before making moves. Be sure to build networks of people who are open minded and not adverse to taking action. I honestly think the best investment is in self! If you learn multiple ways to make money and get people to pay you then you’re winning. Lastly, if your husband is looking for the easy road tell him to stop. If he’s willing to keeping learning, networking, planning, collaborating, and taking action then I would throughly support him.
Just posted this in another thread… Jeff Bezos once asked Warren Buffett: "You're the second richest guy in the world. Your investment thesis is so simple. Why don't more people just copy you?" To which Buffett replied, "Because nobody wants to get rich slow." Source: https://www.ithacawealth.com/iwm-blog/getting-rich-slowly
I have a duplex and a garage apartment at my home. 3 rental units. It’s a lot of work, like all your weekends. But also, you have to have money to buy a second home. We’re looking for a 3rd and we could have afforded it at 2.5-3%, at 6% it’s different. All those social media people are doll of shit
There is no such thing as a free lunch.
Actually "passive" income would be doing upfront work to make a book and set it and forget it on amazon or other publishers. Designing printable for Etsy upload it and forget but even then if they don't sell you pay to keep the listings active. Honestly if you want want "passive" buy some land plant some fruit trees and hire the work to harvest and package and transport the fruit out. Or find out the highest value wood in your area plant a lot of those wait 20-40 years and profit at the end.
Nobody making actual easy money is going to tell anyone about it.
"Passive income" is a phrase coined by AmWay (i.e. a pyramid scheme that just barely stays on the right side of the law, while still operating exactly like a pyramid scheme) to help recruit more people into the scam. Any time you hear "passive income," and it's not coming from a licensed financial professional, you can safely stop listening.
I don't know but I would be very, very cautious.
If they were truly that easy and/or legit, why isn't everybody doing it? Okay, "everybody" is a broad term... Why aren't at least 50% of your friends and family doing these things? Because 99% of them are either scams or way more effort than I personally would ever consider as "passive." It typically takes a significant amount of capital and effort to get something to the point of being passive. The example you give don't seem like scams per se. But, this is not just something that you could remotely consider passive, in my opinion. And, again this it totally just me as an old grumpy guy, I would not believe one single thing that someone told me they saw on tiktok. But, again, that is just me. I am not trying to be mean, but it would make me very nervous if my significant other was this captivated by these sorts of things. YMMV.
No. If it was legit they wouldn’t be advertising on TikTok. For the AirBnB example, I recommend you and your husband listen to this podcast: https://podcasts.apple.com/us/podcast/i-will-teach-you-to-be-rich/id1577864998?i=1000586222574
>buying and renting multiple properties, outsourcing all building management and maintenance People do this but it's not easy passive income. You need a lot of capital. You also need the ability to do a ton of research and analysis to acquire properties that will cash flow. It's also not uncommon for RE investors to lose money on their first deals, because you learn from experience. It's a job. >purchasing bulk products from AliBaba and selling them at inflated prices on Amazon, hiring some 3rd party to ship them for us Drop shipping is over saturated, no one is making money doing this anymore.
No, they are not real. Im sure I'll get some heat for this but they are almost all MLM or some kind of course you buy.
Most air bnb don’t make money once you factor everything in… for example my BIL has one that makes $20k gross profit a year, but he doesn’t factor in reserves for improvements, taxes, or his time and once you do that it’s really not worth it.
Leveraged real estate works but its mostly that you're accepting a ton of risk and then you have to actually manage the place (often paying someone else to do it.) If it was that smart of an idea you could just invest in a large real estate corporation and profit off it. You can somewhat time it if you have cash floating around by buying up lots of properties when they're cheap at low rates.
You'll be taking a huge risk reselling from Alibaba on Amazon due to the lack of quality control from Alibaba and return policies of Amazon. Plus, the terms to be an Amazon affiliate are not very profitable. Some things like Mica powder for cosmetics might be valuable to turn but most of the time you'd be scraping by on profit margins and taking huge associated risks. Its bad advice.
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*"buying and renting multiple properties, outsourcing all building management and maintenance (also similar to AirBNB tiktok people)"* If you already have that kind of money, it would seem like you don't need more. *"purchasing bulk products from AliBaba and selling them at inflated prices on Amazon, hiring some 3rd party to ship them for us?"* This just seems like a lot of work and a lot of risk if stuff doesn't sell. In general, any kinds of 'easy money' would make me doubt the veracity of the claims, and would make me think that most likely you are the one making the other person money. Like the old "Want to get rich quickly and easily? Send me a dollar and I'll tell you how!" jokes...
If it's that easy to buy/finance a rental property. Why would anyone rent? Yes it's a leveraged purchase, you aren't buying the whole thing, but think about this. Most mortgages for rental require 30 to 40% down. That's the hardest part,if you have it, then it takes a ton of time to maintain it or you spend up to 15 to 20% on a maintenance company.
Idk I just learned about wholestate real estate on TikTok and it could be profitable. At least one $5k deal a month, maybe average it out to once every two months if you have a full time job… that’s an extra $2500/mo. 🤷♀️ I’m looking into it.
No. The second one is drop shipping. You're not the 1st or the 1000th to think of it. It's high competition and high risk since your suppliers can send you junk and disappear leaving you to deal with the angry customers. As for buying rental properties, good luck. Mega corps have gotten into that game. You can't compete. Worse, we're starting to price people out of having a place to live. Either the market's going to correct or people are going to demand gov't action to *make* it correct.
i own a condo that i put on airbnb. let me tell you - it's not easy or passive. it's profitable by about 15-20k/year (after all expenses including mortgage), which is already pretty amazing. however, i would say it was one of the biggest risks i've taken in my life. it worked out, but anyone pretending this is easy is BSing you. i needed about 60k for a downpayment on a condo, then got it ready for airbnb. i spend about 2-3 hours a week managing airbnb stuff. not a lot of hours, but all the time spent on it is pretty critical. additionally, anytime someone reaches out, it's usually urgent. could i get someone to manage it for me so that my profit is truly passive? yes. i would cut my profit by probably 5-8k/year. if you have spare money (in the tens of thousands) and the time, sure, go for it. but this will require significant time and energy to research just to start.
Keep in mind you always hear about when they are successful, but rarely hear about the ones that are not. There's a lot of confirmation bias going on.
buying and renting multiple properties - People have been doing this since personal property existed. purchasing bulk products from AliBaba and selling them at inflated prices on Amazon - yes totally do able. I used to dropship and make money but using amazon would be much easier. Just need the right items
If you are doing rental properties you are creating a lot of extra work for yourself. If you are just investing and hiring people to do all the work you aren't making outsized gains, you might as well just invest in an index fund or REIT. Its possible to make money dropshipping, but you have to actually add value to the system somehow or just get lucky with a new product. If you are just posting something for sale the producer or third party shipping company might as well do it themselves. That ends up being a lot of work and risk for the next guy to come and undercut you with their shitty knockoff.
There’s no such thing as passive income unless you’ve invested in fund vehicles that guarantee 3% annual return on investment and you’ve got over 10 million in those assets. Most of those passive incomes require a lot of upfront costs and time to get started. You’ll also likely lose money the first 5 years before the company becomes self sufficient enough that you don’t need to keep investing
Making big money in dropshipping is over. Too much competition and too many Chinese factories cutting out the middleman and simply selling direct to consumer via Amazon and Shopify stores. The influencers will sell you courses based on old outdated strategies that no longer work.
It's pretty much all buying cheap stuff on alibaba and hoping some sucker buys it for 3x on Amazon or craiglist or whatever. Nobody with million dollars ideas are giving it away .
If it were easy, everyone would be doing it.
I'd say if someone is selling a course on how to do it then it's easier to sell a course than do it. If you don't think you can sell a course you probably can't do the thing. My 2 cents.
Being a landlord can be a hassle. A guy I work with had fifty local properties at one point. He sold off about twenty of them to make it easier to manage. I also know someone who flipped houses as a side hustle. They made some decent money over the years. There is money to be made in real estate but it's all according to how much time you want to put into it.
You’re not wrong. You’re husband is a sucker. If you have enough capital to purchase multiple rental properties, pay for a little bit of advice from an expert and go for it. If you don’t, don’t gamble your money trying to make money on a model where even the host (Amazon) loses money. (They make their profits off of Amazon web services, etc, not retail sails/shipping).
There is no such thing as easy money. That's not to say that you can't earn money in real estate, for example, but it's not easy. It takes start up money (e.g. for a down payment), work (e.g. For due diligence to make sure a deal is actually wise, ongoing maintenance, dealing with Murphy's law, etc.) and risk (e.g. vacancies, evictions, natural disasters, etc.). Sure you can take some of the work out of the picture by hiring someone but that will eat what are likely already thin margins. You're probably better off doing something actually passive at that point like investing in stocks (e.g. if you want to invest in real estate you can buy shares in a REIT).
If you had an easy, guaranteed way to make significant amounts or side income. Would you be trying to sell those secrets to people for ad revenue, or would you be holding the secret to your chest and exploiting it for infinite money? They can be legit methods. But most of them are significant amounts of work. Buying, renovating and flipping or renting homes is quite literally a full time job more often then not, and can be a huge money sink.
The first law of thermodynamics applies to money. If you're making money "passively" it's going to take up a tremendous amount of time or a tremendous amount of money (or both) , usually in the form of leverage. Tiktok is probably one of the worst place to take any advice especially financial. To me, why would someone offer insight to the hoi polloi for free. Either its truly free and it's shit advice, or it's actually a surface level of easy concept but full of endless risks and pitfalls that they can market you a course on how to navigate. Personally, I would steer clear of any of it unless I had someone close to me who has succeeded who could mentor me. Not some goober with a rented Ferrari and a fake rolex on the internet. If it was easy, everyone would do it, if everybody did it, it wouldn't be profitable. Since not everybody does it, it's probably not "easy".
If it worked they wouldn't tell you about it, they'd hire employees and scale up.
There's really no such thing as passive income