2020 was riddled with economic challenges for many people. The pandemic forced multiple companies to either partially or permanently close down. Layoffs have become prevalent (both in small-scale businesses and large conglomerates), and the price of goods has skyrocketed due to delays caused by restrictive lockdown measures. You need to own some top income producing assets for cashflow to bridge financial gaps.
If this fiasco has taught us anything, earning and saving money for tough times is essential. We are fortunate that forecasters expect an economic revival in the upcoming year and are likely to offer ample opportunities to increase wealth.
This article will elaborate on several passive income producing assets to increase your wealth in 2021. While passive, these assets can afford you a prosperous future – particularly if you consider pursuing more than one concurrently.
Please read on to learn about the 31 best income producing assets for 2021.
As the name implies, financial markets are markets in which financial transactions happen and ‘securities’ are traded. In practice, this means that investors and lenders – those who have excess funds – lend their funds to borrowers, hoping for a return on their investment.
This type of investment fuels most economies as, due to its fluid nature, it allows money to be brought in where it is needed most and brings benefits to all parties involved.
1. Savings Accounts and Money Market Savings Accounts
While savings accounts may be the most straightforward and safest asset, the type of income generated from a savings account is also one of the smallest. In this case, low risk means low reward.
Of course, while savings accounts have marginally higher interest rates compared to conventional ‘piggy banks’ or regular bank accounts, they will not provide you with a dependable stream of income.
If you prefer a low-risk approach to your money, even at the expense of a larger earning potential, then a savings account is likely to be the most suitable income producing asset for you.
Personally, I use an online bank for my money market savings account. The interest, my annual return, is much greater than my local bank. I use Marcus; take a look here for current online savings account yields.
If, on the other hand, you are driven for higher income, you may be better off utilizing one of our other options below.
2. Certificate of Deposits
While Certificates of Deposits (CDs) have been around for as long as savings accounts, CDs somewhat lack public appeal. CDs are similar in a ‘documentary essence’ to checks or land deeds, but CDs are similar in ‘saving essence’ to a savings account.
Like a savings account, a bank, credit union, and government institution use your invested funds for their benefit. They subsequently hand you a portion of the money’s growth.
Unlike a savings account, however, CDs pay higher interest rates — with a catch. For a predetermined amount of time, you will not be able to access the money invested and will need to wait until it matures. Waiting times (maturity dates) are determined via a contract. The maturity date of a CD acts as security for borrowers and an opportunity for lenders.
The interest received depends on the contractual time of investing your money and on your financial institution.
As of this writing, the general rates for various investment maturities are outlined below:
- Quarter (three months) CDs – 0.50 to 0.60% interest rate
- Biannual (six months) CDs – 0.70 to 0.90% interest rate
- Annual (one year) CDs – 0.85 to 0.90% interest rate
- Eighteen-month CDs – 0.85 to 0.90% interest rate
- Biennium (two years) CDs – 1.00 to 1.10% interest rate
- Triennium (three years) CDs – 1.15% to 1.30% interest rate
- Quadrennium (four years) CDs – 1.16% to 1.35% interest rate
- Lustrum (five years) – 1.30% to 1.35% interest rate
- Decade (ten years) – 0.70% to 1.00% interest rate
CDs are counted among those assets with a low level of risk. In the United States, most CD transactions are insured by the Federal Deposit Insurance Corporation (FDIC) for banks. The National Credit Union Administration (NCUA) insures credit unions. There are parallel counterparts for these institutions in other countries, such as India’s Deposit Insurance and Credit Guarantee Corporation (DICGC) or the Philippines’ Philippine Deposit Insurance Corporation (PDIC).
If you are interested in acquiring a CD, you should contact your nearest bank or credit union or get in touch with your government’s treasury agency for more information. Make sure that you canvass as many borrowers as possible to identify the best CD rates for you and your circumstances.
3. Interest-Paying Bonds
Bonds have the same idea in principle like savings accounts and CDs; a borrower pays you a particular percentage for your investment in their business. Your investment represents a ‘loan’ — something that must be paid in return after the bonds’ pre-determined period. Bond yields (interests) are usually given to lenders in intervals called ‘coupons.’
What are the different types of bonds to invest in?
- Companies (Corporate Bonds)
- Conglomerates and similar stable businesses (Investment-Grade Corporate Bonds)
- Small enterprises (Junk Bonds)
- Whole national government (Treasury Bills / National Bonds)
- National agencies (Agency Bonds)
- Local government bonds (Municipal Bonds)
- Foreign individuals, groups, companies, and governments (Foreign Bonds).
As bonds are technically loans, they pose fewer risks than other assets (for example, stocks). Bonds have a lower risk of non-repayment. Historically, while bonds are more stable than stock prices, they are also consistently less productive.
Overall, bonds are a better option for those who have a low-risk appetite while still wishing to gain a considerable profit from money-lending.
If interested in investing in bonds, you should research options that are most suited to your risk tolerance and financial situation. If you’re lucky, you may even be able to find a falling angel offering a yield of up to 6%. The more yield from a bond, the more risk to the income producing asset.
4. Dividend-Paying Stocks
Who said that ‘owning’ a business needs to be laborious? Stocks may well be the least laborious of all forms of company ‘ownership’.
A stock is a type of security that indicates that the owner has a proportionate possession in an issuing corporation. A stock unit is called a ‘share,’ and someone who owns a stock is called a ‘shareholder.’ Technically, owning stocks is not equal to owning a fraction of a company, but rather, it is like owning a part of the company’s assets. This is because, in most countries, laws treat corporations as ‘legal human-like entities.’
This kind of set-up protects both shareholders and corporations from vulnerabilities and interventionism. A corporation’s board cannot control a shareholder, nor can a shareholder directly control a corporation.
Due to owning a portion of a company’s assets, shareholders also own a portion of the earnings. Many larger and more blue-chip stocks pay out earnings to shareholders through ‘dividends.’ The dividends are handed out to shareholders regularly, like quarterly.
Of course, company dividend rates vary, with conglomerates tending to give larger dividends for their shareholders, with some having additional rates of up to 25%. The higher dividend stocks tend to be financial, real estate, or commodity-related.
The key weakness of stocks is their excess liquidity, making prices more erratic in this income producing asset. As a result, although high-profit peaks are possible, deep price dives are also common. This is evident in multiple economic bubbles that have happened in the past.
Four largest stock market crashes in history:
- Crash of 1929 – Great Recession
- Crash of 1987 – Black Monday
- Bust of 1999-2000 – Dot.com Bust
- Crash of 2008 – Great Recession
The stock market’s almost-unpredictable behavior requires shareholders to conduct thorough research and make market predictions to make the best investment decisions. On the other hand, investors can invest in index funds to reduce their stock investment volatility. These funds split income across multiple companies and divide risk across an extensive range of companies and revenue streams.
Financial instruments are financial documents exchanged between two or more parties. It leaves one party side with assets and the other with liabilities.
Financial instruments can be of various forms, including cash, derivatives, and asset classes. A financial instrument generally involves smaller-scale transactions. The smaller transactions fuel monetary flow into lower classes and generate economies from the bottom up. See our examples of financial instruments.
5. Peer-to-Peer Lending
Peer-to-peer (P2P) lending for investors is likely the simplest way to earn money in fintech investing.
This lending method involves individuals or groups financing other people. As the name implies, these lenders are not related to any public organization or formal financial institution, generally lending money at their own will.
Usually, lenders are acquaintances of the borrower with a relationship built upon trust. This kind of P2P lending does not prosper hugely since an emotional connection exists between the lender and the borrower.
If, however, you opt to lend your money to strangers for a greater return, online P2P lending platforms exist for this purpose. These websites are notorious for generating hype for a sizeable return on investments. Some of them include Upstart, Peerform, Payoff, MoneyMatch, and Faircent.
Although these platforms do not ask for a credit score and salary verification from borrowers, they use specific guidelines to protect both parties. Private P2P lending platforms agree that loans should happen almost instantaneously, with flexibility in interest and reimbursement time.
Most P2P-made loans are paid within 36 months, accompanied by interests that range between 5% and 15%. While the interest rate is higher on this income producing asset than most banks can offer, it also comes at a cost.
Private lending is a two-way gamble between the borrower and the lender. Both parties rely on the trustor intervention of the peer-to-peer lending platforms by opening the possibility of non-repayment. The only way to combat this is to ensure regular communication with both the borrower and the lending platform.
In addition, if you like real estate investing and peer-to-peer lending, then take a look at real estate crowdfunding. It combines social media and investors to buy properties. Real estate crowdfunding lets an investor hold equity in a property and become a shareholder. The process helps companies gain access to capital and an investor group they would not have reached using the traditional capital raising methods.
6. Structured Settlement
A structured settlement is an arrangement method for an injury case by which an aggrieved party acquires reparation money in installments instead of bulk.
A structured settlement was originally popularized in Canada but is now widely used in the United States and other Commonwealth nations. Businesses generally use this technique to settle negligence cases rather than being sued or losing substantial amounts of money up-front.
While this may be a reliable source of income, it requires the individual to be an aggrieved party to receive compensation, meaning that another must inflict injury upon you to the point that an excellent judicial case can materialize.
Another contentious point is the potential dishonesty of either the defendant or the claimant. Someone might falsify being harmed, while others might give unreasonably low compensation to the claimant.
It is, however, also possible to enter into agreements as an investor. Investors can lend a defendant cash to pay their victims a lump-sum. In return, the defendant should pay back the investor in installments and with interest. Structured settlements have the ability to become a viable income producing asset.
Annuities are contracts made between an individual and an institution. The individual can receive installment payments with interest from the institution after paying an initial amount of money toward the annuity.
Types of annuities can include; securities, pension funds, health and death benefits, spousal coverages, mutual funds, and structured settlements.
Most of the annuities available in the market and offered by government agencies or private companies are customizable and flexible. Moreover, many annuity products have reduced taxes, and some with no tax at all.
Annuity payments are a preferable method of claiming funds compared to claiming in lump-sum, which can be subjected to hefty taxable income and fees. For example, if you win the lotto, people can choose an upfront lump sum of money or annuity payments for years.
On the other hand, the length and amount an investor must spend to avail all of these services can be expensive. Clearly understand the terms and the fees associated with an annuity investment.
Nevertheless, annuities remain a popular fund source for many.
8. Writing Covered Call Options Contracts
Although this strategy might seem complicated at first, it is a reliable income producing asset for shareholders with almost-static stocks (low volatility) at low risk.
A covered call is an options technique whereby underlying stock and a corresponding options contract are transacted between two parties.
To better explain, allow us to put up a hypothetical situation:
First, a covered call prerequisite is that the trader (the original shareholder) must have at least 100 stock shares and a corresponding call option.
This call option has two main parts: the agreed duration of the contract’s effect and the equivalent stock’s strike price, which should be higher than its current price.
This call option is sold to a buyer at a price. After this, one of two things will happen; the stock shares’ value increases beyond the strike price, or they do not.
If the former happens, the shareholder is obligated to sell the stocks at the strike price value and will no longer earn income from stock dividends. If the latter occurs, the shareholder keeps both the stocks and the call option premium payment initially received from the call option buyer.
Further to this, the shareholder can potentially earn income from both the call option payment and their dividends if their shares rise in value, but not beyond the strike price.
This sounds complex at first but once fully understood, you can use this great method to earn money while doing virtually nothing.
Income-Generating Real Estate
Our next top income producing asset is the ever-faithful real estate market. Since the Industrial Revolution in the 19th century, many people have become wealthy by exploiting the real estate market.
Real estate cannot only be sold; it can be improved, left to appreciate, and utilized during capital appreciation. Real estate is a physical (or hard asset) rather than a liquid asset, rendering it less susceptible to sudden market price fluctuations.
There are multiple ways to get involved in real estate investing; the options are wide-ranging. Reading on below, you will find some of our top suggestions for maximizing your profit in real estate investing.
9. Renting Your Single-Family House
Rental properties are the classic strategy of most real estate entrepreneurs. Rent out your single-family home tends to be profitable over the last decade and is easy to take care of without too much professional assistance. Examples of single-family homes include isolated homes, townhouses, twin houses, rowhouses, and bungalows.
Single-family real estate rentals present a manageable workload, with the renter bearing the cost of utilities, furniture, and appliances. Further to this, revenue gained from renting single-family houses is generally more substantial than for other properties due to appreciation occurring at a faster rate.
This contrasts with multi-family homes (discussed below), where basic utilities such as gas and electricity are charged to the landowner. Renting out multi-family homes usually results in increased costs, management oversight, and time. However, the financial results may be greater as a total return.
10. Renting Your Multi-Family House Out
Multi-family houses are structures that offer lodging for two to four families. Examples of multi-family housing include apartments, townhouses, condos, duplexes, and quadruplexes.
As a result, income from these rental properties can be up to four times greater than a single-family house. It can increase cash flow tremendously.
Maintaining a multi-family house may be easier than multiple single-family houses because the jobs can be consolidated and undertaken in bulk at one location.
On the other hand, these rental properties require a hefty initial capital cost. Establishing or buying a duplex, triplex, or quad requires significant expenses for division and rehabilitation. Purchasing a multi-family home via loans and utilizing home insurance would allow an owner to manage and track liabilities more easily.
A concern with multi-family houses is that it creates an undiversified investment portfolio, rendering the investor more susceptible to location issues than investors with scattered real estate exposure.
On the other hand, multi-family houses tend to dominate the market. This is evident even during economic struggles, where families tend to sell their properties and invest in multi-family rentals with the hopes of cutting costs. It recently happened during the Great Recession of 2008, when single-family house prices dipped. As a result, duplexes and triplexes increased in valuation.
11. Owning an Apartment Building
Are you not content with meager income? Do you want to go full throttle with real estate investing? Apartment buildings maybe your best income producing opportunity!
Apartment buildings are known for the exponential growth they bring in cashflow. While single-unit apartments increase income in a particular plot of land, a duplex can produce twice, and a triplex can bring three times the return of rental income on the same land. An apartment, however, can provide anywhere from ten to one hundred fold rent. Even a minimal monthly rental increase can significantly to your wealth.
Also, miscellaneous income in real estate can be obtained from large complexes vs. small-sized lodgings. Examples of miscellaneous income include parking fees, pool rent, vending machines, in-house cafeteria, gym membership, and laundromats. Utilizing the apartment complex amenities can provide additional income on top of rental payments.
On the other hand, due to the large size of the initial investment, many factors need to be considered when purchasing an entire apartment building. The initial real estate investment factors include appearance, accessibility, location, and more.
Everything must be built to encourage people to move in and maximize profits. After all, developing a large building requires an excessive amount of capital that should be channeled into providing maximum return on investment.
Apartment buildings are also generally more vulnerable to other liabilities, such as legal and financial liabilities. Governments usually levy heavy taxes on more extensive infrastructures, and the owners are generally held responsible for accidents that may occur. Large buildings are also under extreme scrutiny from officials and more likely to be plagued with lengthy processes and bureaucratic permits.
Apartment building management is necessary to avoid these problems. It’s generally advised to outsource apartment management due to the benefits of their knowledge and experience.
Other measures to consider include hiring security guards and placing closed-circuit television cameras around the building.
Overall, the Great Recession has shown that investing in apartments is a viable source of steady income. With proper preparation, planning, and maintenance, you will grow your wealth in no time with income producing apartment building.
12. Mobile Home Parks
Legendary investor Warren Buffet once earned more than a billion dollars with his investments in mobile home parks. This fact shocked many, revealing mobile home parks to be a new booming sector of the real estate industry.
Once a laughing stock in the real estate world, 5% of people in the United States now live in mobile trailer homes —approximately 20 million Americans. Similar, manufactured housing is also well-established in the United Kingdom, Germany, the Netherlands, Australia, and New Zealand.
The demand for mobile homes is increasing globally. With the ever-increasing prices of houses and plots of land, many people in the low and middle-income range rely on these cheaper and simpler alternatives.
But the money itself is in the land and not the units. In the United States, most trailer homes are owned by the tenants. The mobile home is placed on the park owner’s land. Each mobile homeowner pays the park owner monthly land rent.
As a landowner (or should I say park owner), there are many benefits to this set-up.
First, it is cheaper to purchase mobile home parks than regular homes. As one column in Forbes puts it, while a typical home costs $100,000 per household, a plot of land of the same size costs only around $10,000 — a whopping ten times lower.
Second, the landowner takes one big plot of land and divides it into small ones to fit multiple mobile home units. It’s a similar methodology as apartments when evening out the cost. As a result, vacancies do not severely impact your cash flow because the revenue source is diversified into multiple plots of land.
Mobile home parks require less maintenance; most park owners only take care of the land, not the units or buildings themselves.
As with apartments, mobile home parks must first find a tenant willing to place a home in the park and rent the land. A steady income is almost guaranteed once a mobile home is placed in the park.
Citing the same Forbes article, the author says that ‘it can cost a tenant $5,000-$7,000 to move their home out of a park.” 98% of mobile homes will remain in the same location after the second year. A large percentage of homeowners never expect to sell their homes. 75% of owners expect to stay in their mobile homes for five years or longer.
The benefits of owning a mobile home park include convenience and muted risks. This is why more and more Americans and Europeans are investing in an appreciating and income producing asset class.
It’s a fragmented industry, and there are mom-and-pop owned mobile home parks throughout the United States. Do your homework before investing!
13. Short-Term Rental Housing
The tourism industry grows by the day (of course, minus 2020). In 2019 alone, travel and related expenses directly contributed $2.9 trillion to the global GDP — roughly the entire Italian GDP.
An increase in travel directly increases the demand for short-term rentals.
In 2019, the industry leader, Airbnb, hosted more than 2 million accommodations per night globally. Airbnb’s initial public offering (IPO) was worth $100 billion, one of the largest IPOs in 2020. Its nearest competitor, Vrbo, also hosted hundreds of thousands of transactions between homeowners and tourists.
These platforms (both of which we highly recommend) rely on homeowners willing to rent out a house for a short term period. This is the concept of short-term rental housing; instead of hotels, visitors rent out authentic homes for a couple of days while on vacation.
The aforementioned passive income set-up has brought riches to many. While short-term rentals are cheaper than hotels, the rent rates are higher than long-term, regular monthly, and annual renting—this is an opportunity for homeowners to rent out their properties for short-term to high-paying customers. Once landlords can ensure a steady flow of temporary customers, this simulates long-term renting — but at better rates.
Since the renters are only present for a short time, owners can adjust their rental rates every time a customer leaves their lodging. This lets owners control their business and become more flexible and experimental with their offered rates and amenities. This would be impossible with long-term housing rents, where renters are more likely to complain about and negotiate rent hikes.
The last benefit to short-term rental housing is one that cannot be replaced with money. It’s the cultural experience and relationships built during the tenant’s short visit. The experience can impart unforgettable memories both for the owner and the client.
The potential downside is your property’s location. If it’s located near a seasonal sport, such as a ski resort, your cash flow will be lighter in the summer months. Your income producing asset may experience seasonal peaks and troughs.
Alongside this, there may be other minor disadvantages, such as rowdy renters or legal restrictions. Even so, listing your house on Airbnb or Vrbo should let you make money you’re your short-term rental.
If you’re managing the short-term rental housing yourself, then consider buying your primary residence nearby. We have a guide of states with free land, which may produce a greater return on investment.
14. Real Estate Investment Trusts
Many investors out there dream of becoming a ‘landlord’ or even a ‘mogul’ with vast arrays of properties – but are not equipped to fix leaky pipes, replace broken door hinges, or unclog drains or cesspools. It’s easier to become a real estate mogul by playing Monopoly.
There is an answer to your wishes! Well, sort of. We are introducing Real Estate Investment Trusts (REITs).
REITs are companies that invest in a wide variety of viable real estate properties, and people can invest their funds in these companies. It’s one of the best income producing assets in real estate where someone else manages the properties.
In the United States alone, it is estimated that 87 million people are investing in REITs, with the gross market value reaching up to $3 trillion.
Similar to stocks, REITs do not own any property. Instead, they finance establishments, including houses, apartments, malls, hotels, warehouses, and cable towers, among others. This aspect of REITs gives it the most decisive advantage among other money-making businesses; they are extremely diversified.
REITs are usually divided into retail, residential, healthcare, office buildings, mortgage, and those beyond the five categories mentioned above.
REIT mutual funds and REIT exchange-traded funds (ETFs) are publicly traded entities in the stock market. Investors receive a share of profits, often each month or quarter, through cash dividends.
Of course, there is a risk with burdensome taxes and fees with real estate in other countries. Even if they are diversified, some REITs are still susceptible to economic instabilities and an oversupply bubble. For example, during the COVID crisis, mall and hotel REITs underperformed while industrial and warehouse REITs outperformed.
In general, REITs offer one of the better deals you can grab in the market!
If directly planting crops is not the career for you, then go for being a haciendero! (a farm owner)
According to the National Sustainable Agricultural Coalition, 39% of all farmland in the United States is rented or leased. This figure is even higher in other agricultural countries, especially in Southeast and South Asia.
Savvy investors can use this to expand and diversify their portfolio towards this “uncommon” sector of the real estate industry.
Farmers looking to rent land can allocate funds to other necessary aspects of their business, such as seeds, irrigation, fertilizers, additional workers, and technology. Alongside this, farmland owners can receive rental payments regularly.
However, the rental and selling prices of agricultural lands are no joke.
The Okanagan farmland in Canada is worth $103,000 per acre. This value increases in Rhode Island, where the land is sold for $138,000. And if that’s high, the farms of Almeria, Spain, are more expensive than those in Rhode Island —priced at around $213,000 per acre.
What is the expected rate of return on Farmland?
If rented, the average return is $50 to $250 per acre per month. However, the most expensive farms in Europe are rented for 791 euros per hectare — that’s about $2400 per acre per month.
Likely the most severe problem that agricultural landlords face is the intense scrutiny from their governments. Especially considering that land reform is still a contentious societal issue up to this day.
If being a farmland owner is not enough, it might be time to enter the timberland business!
The timber industry is one of the largest in the world. In 2018, the sector earned $258.5 billion in the United States, employing almost a million Americans. This business is also profitable in the Northern hemisphere (mainly in Russia, Sweden, Poland, Austria, and Finland) and the tropics (Brazil, Indonesia, and Malaysia).
Since timber requires a long time to grow, this income stream requires a good measure of patience. Nonetheless, it is worth the wait, especially if you are already reaping the benefits.
Softwoods, cedar, are less like pine, redwood, and dense but quicker to grow. Most trees are ready to be harvested within a decade or two. Meanwhile, their denser counterparts, the hardwoods (maple, oak, and walnut), require 25 to 100 years to mature.
Some of these can also become an alternative source of income. For example, maple syrup from the sap of the maple tree is a staple of Western breakfast. The product has a huge market and can be sold while waiting for trunks to mature.
The value of timberland varies depending on location. In Pacific Northwest USA, where timberland is among the most pricey, bare land is around $160 to $200 per acre. Plus, there are additional planting costs of $120 to $180 per acre. When these are filled with mature trees, the prices rise to $500 to $2000 per acre. For some high-class areas, the prices can even reach $100,000 per acre.
According to estimates, the timberland industry is said to potentially outperform the stocks of the 500 most profitable companies in the United States. However, landowners must abide by existing environmental laws and restrictions to avoid lawsuits and other farmland issues.
17. Mineral Rights
Mineral rights are another lucrative industry; the global mineral mining business was estimated at $77.8 billion in 2018. Compared to farms and timberlands, however, the mineral rights asset class is much more complicated.
First, there is a distinction between the rights that governments approve. Generally, these are separated into surface rights and mineral rights. Surface rights allow the owner to make changes on the surface of the ground. The mineral rights will permit the owner to possess the minerals and resources found underneath.
Second, different countries set different rules regarding mineral rights. In countries like the United States, Finland, and Sweden, any private entity can own the minerals on land where they have mineral rights, given that they obtain proper permits. This contrasts with other nations like England, Mexico, and the Philippines, where minerals and other natural resources are constitutionally considered under their respective governments.
This profitable asset class will only function in countries with lighter restrictions on mineral rights where private citizens are allowed to explore and mine their land.
Once verified that a person has mineral rights in a piece of land, he can do two things:
- Mine themselves
- Give consent to a mining company (as long as you receive royalty rights)
The first method is quite expensive for many, given the prohibitive equipment costs for the average investor. The second method is likely to work best for most investors. It requires no upfront cash and lets them produce income from the ground.
A lessor (landowner with mineral rights) can ask either for an up-front payment or deferred royalties from the lessee (mining contractor) for the mined minerals in his land. Regardless, both of these are rewarding endeavors — with some royalties reaching up to 12%.
However, there are two main risks to accepting an ongoing royalty, including oil prices and volume of mined content. As oil prices are volatile, so are the earnings from royalties. Moreover, the money to be received depends on the amount of mined content.
On the contrary, lessors can lose potential earnings if the up-front compensation is lower than the proportionate and acceptable ratio of outflows.
Even so, if you own some mineral rights or have inherited some mineral-rich land, then this is the best way to maximize the return on the asset.
18. Tax Lien Certificates
Local government is always looking to unload as many liabilities as possible — even property taxes. This gave rise to the practice of tax lien certifications.
In essence, a tax lien certificate is a declaration of interest against properties, usually a house. It is a way for the government to collect property taxes that have gone unpaid. Tax lien certificates are generally sold via an auction process to investors.
A tax lien is placed on a property once an owner fails to pay property taxes. This is lifted once the debt is paid in full. If not, these liens are offered to people who are willing to take over the tax payment. In this case, the property owner has effectively mortgaged his property to the lien buyer. The tax lien precedes mortgages, meaning the owner must pay the lien before selling their house.
Savvy investors use this strategy to earn high-interest rates from paying other people’s taxes or receiving cheap, unattended properties. In the United States, 29 states allow tax lien certificates, with average interest ranging from 5-12%, although some cities and towns mark it up to 36%.
While this income producing asset sounds promising, there are some cons to consider. One is the status of the property. It must be verified that some owners are intentionally avoiding due property taxes.
Foreclosed properties from tax liens are also susceptible to changes from political, economic, and societal norms. Moreover, private institutions such as hedge funds, REITs, and real estate companies looking for properties to flip for a profit set the bar in auctions very high. The cash-paying institutions make the market almost impenetrable for small-time investors.
It is advisable to thoroughly study the property before bidding on it at the auction. If possible, do a virtual tour of the house, stop by and look into the windows for damage or potential problems, and visit the neighborhood, so you don’t overpay relative to the area’s comparable homes.
Become an Entrepreneur
Who says that entrepreneurship is unprofitable?
Actually, many business people started their ventures as simple entrepreneurial ventures. Studying the basics of handling money will give you essential insight along the way.
Entrepreneurial businesses are the foundation of local, national, and international economies. Based on a study commissioned by the Global Entrepreneurship Monitor, there are around 582 million entrepreneurs in the world or approximately 7.5% of the global population. Most billionaires are self-made and started as a simple yet savvy entrepreneur.
Also, for those introverts, some of the businesses below are perfect jobs where you work alone.
So if you’re asking whether being an entrepreneur will make you rich, the answer is a resounding ‘yes’!
19. Own an Income Producing Traditional Business
As the name implies, these are business ideas that repeatedly have and will continue to pass the test of time. These businesses may sound and look lackluster, but they are surprisingly profitable income producing businesses.
In fact, George Soros, one of the world’s foremost philanthropists, once said that ‘great investments are boring.’ Harvard Economic professors Richard Ruback and Royce Yudkoff teach courses on how to grow a small enterprise or startup. Chinese billionaire Jack Ma applied to 30 jobs to establish a small company until building his China business empire.
Sadly, smaller enterprises are more vulnerable than larger corporations due to experience, economies of scale, and capital.
Many starting small-business rely on a small pool of clients to survive, unlike large corporations. This business risk calls for immediate and effective diversification of the customer base to increase revenue.
An additional issue is the business’ dependence on its founder. Most small companies are reliant on the founder. Their absence paralyzes the whole operation unless employees or other co-founders are meticulously involved in day-to-day dealings.
Finally, money and startup capital is a major concern as it is needed to manage and fund everything — from raw materials, labor, production, transportation, salaries, and other additional costs.
Happily, some businesses are easy to start as a beginner income producing asset. These include:
Start a carwash business
These are some of the easiest to start and most profitable example of entrepreneurial business. A typical car wash requires a conveyor belt, cleaning materials, water supply, workforce, and the area where cleaning would be done. The type and style of cleaning differ depending on the size and nature of the customer’s car.
How much money can you make with a carwash business?
Estimates mark the annual gross income of $139,000 for a carwash business, while the owner can get a yearly profit of $86,531.
Start a Passive Income Laundromat
In high-income countries, laundromat shops are prevalent, and you could expect to see one in each neighborhood. A laundromat does not need multiple employees as one employee inside the store can monitor business operations. Some self-service laundromats don’t even require an employee.
A regular self-service laundromat requires a set of automated washing machines and dryers, detergent, bleach, water supply, and other basic necessities for washing clothes. According to Laundromat Resource, the average self-serve laundromat can make around $100 to $1,500 a day.
Start a Vending Machines Business
Most vending machines do not require supervision. The owner must purchase a few units placed in populous areas, where passersby usually see or visit. These must be replenished when stocks are out. A regular vending machine could earn at least $5 a week, although weekly earnings can surpass the $100-mark.
These are spare infrastructures allotted to store products, equipment, and staff of other individuals or groups. This business requires a facility that can hold enough space, security, and condition for these stored materials. A typical self-storage facility can earn an average annual income of $361,000 to $798,800.
Specialty Cafés and Bistros
Business-people who aim to establish this type of business must have basic knowledge of cooking and serving customers. They must also have a clean, customer-friendly, and broad area to operate. A specialty cafe business is considered small to medium-scale, employing at most 20 employees. Moreover, these businesses need significant startup capital for materials like raw food materials, utensils, furniture, and air-conditioning. The earnings of cafés and bistros vary wildly depending on food served, number of customers, and establishment capacity, although net income margins play from 60-85%.
20. Buy a Franchise
In the post-World War II world, one business concept flourished until it dominated today’s world: franchising.
Franchises offer a lot of advantages, but probably the most important is brand recognition. In a world where the market is already saturated with an array of enterprises, businesses with name-recall are more likely to survive. It’s because consumers to employees, to local officials, trust the things they are already used to. As a fledgling businessperson, borrowing a business’ identity, trademark, and logo offers a jumpstart and leverage for earnings and growth.
These established brands are already masters of their craft with an established income producing process. Being a businessman who aims to grow safely and immediately, starting a franchise is a more ensuring way to succeed. It’s even better if the parent company offers training and observation, which can guide you to become a better entrepreneur — and offer you larger commissions alongside.
Top franchises are usually also canvassing the best areas to establish a business, which hands your branch the maximum potential for development. However, following a laid-out plan and formula hinders business owners’ personal touches in their branches. Franchises are adamant in prioritizing profits and safety of investment over individuality and creativity.
Different brands also have other requirements and standards. For example, KFC has startup costs that range from $1.2 million and $2.5 million, a McDonald’s branch is worth $1 to $2.2 million, or you can start a Subway at around $116,000-$253,000. Some franchise brands might also require you to have a minimal amount of assets and experience as ‘insurance.’
Of course, if you want a sure and immediate victory, then buying an existing franchise is one of your best bets!
21. Start a Website
In the current digital era, websites are one of the easiest ways to earn some money!
Despite popular belief, however, having a high traffic site does not equate to earning more from ads. With online advertisements, the most crucial aspect is clicking. A site that can generate a thousand clicks a day can earn up to $450 per month.
Earnings are, however, not only from advertisements. As in real estate, site-flipping is also gaining traction these days. Investors purchase domains hoping that clients purchase them—platforms like Flippa host these kinds of site-flipping website transactions.
The main disadvantage, however, of advertisements and site-flipping is the probability of immediate earnings is low. To boost the likelihood of earning more money, site-flippers must methodically research the websites that others will want to buy for a premium. Investors want a website with high traffic, diverse income, consistent traffic, multiple traffic sources, consistent and growing income, and more.
Our Great Depression survival tips guide talks about starting your own business and controlling your own destiny; have a side-hustle to make extra income and insulate any downturns.
22. Create A Product or Course
If you are doubtful about the certainty of flipping websites or ad placement, then creating digital products and courses may be more up your alley.
As more and more people consume digital content by the day, the market for digital products and courses is also growing. Whether these are educational, entertaining, or both, there is no limit to innovation!
Some of the in-demand digital products nowadays include electronic books, online courses, instructional videos, podcasts, webinars, lectures, charts, and music.
As of January 2020, the top e-books on Kindle were novels, children’s books, and biographies. The top podcasts of 2019 are centered around entertainment, stories, and instructional shows. Of course, you could innovate aside from these genres — after all, the more focused your target audience is, the higher chance you will earn something out of it.
Another positive aspect of creating digital products is that anyone can do this: male or female, students or graduates, employees or not, young or old. The only things you need to invest are patience, time, effort, and ensuring that these digital products will sustain the public’s need — in short, you can even start an online course without capital.
23. Buy Royalties
If you are a creator, you might also opt to license your creation to generate royalties — and this income producing asset can even sustain you for life!
Reluctant about this option? Just think of the ‘Happy Birthday Song.’ While Hill Sisters penned it in 1893, the song’s license has passed hands through the years. Now, the right for royalties is held by Warner Chappell, a music holding company. And their revenues are no joke! It is estimated that the song earns $2 million a year and has earned $50 million in the song’s entire lifetime. Every film, series, and media that use it must pay Warner Chappell, or they’ll face legal repercussions.
Another example of buying royalties is Stephen King and his novels. The author, known for novels like ‘It,’ ‘The Shining’, and ‘In the Tall Grass,’ has a net worth of $400 million — and most of it has come from royalties of these novels that were turned into films.
If you want to imitate these individuals’ success, you can scour for royalties online available for people to buy at RoyaltyExchange.
As with digital products, however, investors must evaluate these royalties to ensure that they are likely to have future value.
Rent Out Your Stuff
If you have some stuff that is lying out there, why not rent it out? Do you realize you are surrounded by some of the best income producing assets?
You can rent out your stuff to drastically cut expenses, or it’s an excellent way for a beginner income producing method.
Allowing your equipment to be rented by others turns your possessions from liabilities into a passive cash cow!
This ‘shared economy’ culture contributes to societal and behavioral changes, too, as this espouses the conservation and reusability of products. In the end, this is also beneficial for the environment.
The good news is there are multiple platforms available on the market that can help you rent out your stuff online and make money fast — some of these can be found below.
24. Rent Out Your Car
If you have a new car that is spending its time sitting in your garage due to your travel schedule, let others borrow it for a price. Instead of being a constant liability, your car is now turned into a profit-making machine!
In the past, people would only lend their cars to acquaintances and receive compensation depending on a spoken agreement. However, this kind of transaction does not maximize your potential earnings. Using an online car rental service takes out the emotional connection between the lender and the borrower.
Luckily, technology has an answer for everything. If you consider lending your car to an unfamiliar person in hopes of making some extra money, the online car rental apps and platforms are already available and proven.
A popular car sharing online platform is Turo. Its peer-to-peer car sharing has attracted millions of members. As of its recent update, Turo hosted more than 14 million members and 450,000 vehicles. Turo also has positive reviews from respected organizations, like CNN, USA Today, The Washington Post, and Bloomberg.
Turo takes 25% of the income for every transaction, but that covers insurance and listing costs on the app. The average car lenders using Turo makes $720 a month, although this fluctuates depending on the car’s model and how frequently it is lent.
The eligible cars to rent on Turo must meet the following requirements:
- Registered – The vehicle must be registered in any state besides New York
- Insurance – Meet the required insurance minimums
- Age – Less than 13 years old
- Fair value – Valued at less than $150,000
- Mileage – Less than 130,000 miles
See Turo for more details about vehicle eligibility requirements.
Another major car-sharing platform, Getaround, also operates on a similar principle. The average car lenders in Getaround make $800 a month, but this varies based on the car model and how frequently it was lent.
Aside from the advantage of making extra money from unused cars, these platforms are highly-flexible and customizable to your desires. However, as the car owner, you still need to manage the orders, requests, hand-offs, and similar processes, although they consume minimal time.
25. Rent Out Your Land
Maybe you have an extra piece of land not yet allocated for real estate? You could potentially open it for campers!
You can register at HomeCamper (previously known as Gamping), an online booking platform for outdoor stays. The platform connects visitors who are keen on an outdoor vacation with landowners.
This is a win-win; campers get to enjoy a comfortable and relaxed night while you rent out your land for money without even going out. You can even supply your campers with tents, treehouses, tables, chairs, mats, and other outdoor properties for an additional fee.
Like every other platform, revenue varies in price, depending on the host’s location and amenities. HomeCamper charges a 7% service fee for every transaction wired via MangoPay several days after the renting. You should note that HomeCamper does not require its users to submit and verify their personal information. It leaves the burden for the host to communicate and ensure the identity and reliability of their clients.
Moreover, by signing up to host campers, you bear all losses during the visitors’ stay, including the costs to repair broken equipment and replace destroyed or lost objects. It is suggested that hosts have the appropriate and adequate insurance to be secured during unfortunate situations.
You may want to consider speaking with a real estate attorney or your accountant about whether to consider upgrading your home business to an LLC.
26. Rent Out Your Parking Spot
Congestion is a significant issue in many metropolises worldwide, and one of the main culprits is improper parking of vehicles.
Car owners usually park their cars on side roads and sidewalks, thus choking spaces allotted for moving cars and pedestrian crossing. On the flip side, there are also many vacant parking lots, especially during the day.
But two birds could be hit with one stone by renting out your parking spot. Parking space owners are making passive income from vehicle owners who want to park their cars safely.
One of the best options to do this is by using CurbFlip. It is self-dubbed as “the Airbnb of Parking Space Rentals.” CurbFlip is a website that links parking space owners to car owners with the end goal of parking vehicles safely and legally.
The site is flexible; it allows you to choose whether to rent your parking space regularly, weekly, or monthly. It also lets you host several bookings at any given time in any given month. The parking rates are set by owners, although CurbFlip takes commissions ranging from 5-16% and an additional 3% for PayPal transactions. These flexi-rates are notably useful when the demand for space is high.
Both the renter and the lender must complete a personal information form to ensure security. It also makes communication and payment virtual, efficient, and convenient.
As with HomeCamper, the parking spot owners are advised to have proper insurances since CurbFlip does not take responsibility in the case of accidents and unfortunate incidents.
Besides extra income, a profound benefit of parking space renting is it makes your house ‘look more secure.’ A car parked in a house’s garage gives the appearance that a resident is inside, something that can deter criminals. It’s like putting an ADT sign in your front lawn to tell criminals to look somewhere else.
Renting out your parking spot also offers the car owner safety from theft, vandalism, or damage on public parking lots and side roads.
27. Rent Out Space in Your House
While you can earn $361,000 to $798,800 by buying a self-storage facility, it requires an initial capital investment that might be hefty for starters.
The good news is there is an alternative option to earn money from home in a similar aspect. Spare space in your house can be your best income producing asset.
Neighbor is a website that lets you do just like that. The best part about using Neighbor is its commitment to security and the importance of customers.
The company offers a so-called $2 million Host Guarantee — a form of insurance that protects hosts and clients from liability and property damage.
Moreover, hosts are the ones who determine whose things will be stored in their place, ensuring security and safety.
Meanwhile, all expenditures are paid via Stripe and deposited directly into your bank account. As long as the room is rented, the owner will receive compensation from the platform regardless of the renter showing up or not.
According to Neighbor’s website, a vacant closet could earn you $384 a year, a spare driveway can earn you $1536, a garage can earn you $2332 annually, and renting a basement can earn you $3108 a year. Isn’t that tremendous?
Even CNBC regards Neighbor ‘like Airbnb for your stuff’.
28. Rent Out Your Recreational Vehicles (RVs)
Even during a pandemic where travel is restricted, the sales of recreational vehicles (RVs) are rising through the roof. In fact, in July 2020, the RV Industry Association reported that more than 40 thousand RVs were sold — the highest month since 2018.
RVs are becoming popular in the Western world for their convenience as both lodging and a vehicle combined in a single property.
Nevertheless, before the pandemic, RVs became a liability for many families, given how infrequently they were used. Most RVs are parked in garages for most of the year.
RVShare was the first peer-to-peer RV rental platform, while Outdoorsy followed suit. There are no listing fees for either RVShare and Outdoorsy. Each RV for rent by owner site takes a 20-25% commission and related costs.
Users, specifically RV owners, can set their price with the vehicle’s characteristics and specifications are taken into consideration.
Both RV rental platforms offer similar safeguards for renters and owners. RVShare evaluates and assists its renters to avoid accidents. Meanwhile, Outdoorsy conducts regular random checks to ensure that renters follow traffic laws.
Both sites also offer insurance and liability coverages in case of inopportune instances and disasters. Some of the covered RV insurance for renting situations include collisions, fires, vandalism, earthquakes, and theft, among others. The insurance is valued at up to $1 million.
RVShare and Outdoorsy claim that owners can earn $60,000 and $32,000 from using their respective sites over a year. However, other factors must be considered, such as the vehicle’s size, the technology involved, the advancements, the amenities offered inside, and how often you rent out your RV.
Both RVShare and Outdoorsy are excellent options to transform these liabilities into income producing assets!
If you land up renting an RV, check out our guide on RV kitchen essentials and gadgets.
29. Rent Out Your Bike
Spinlister is an incredible way to make money with your bike and other sports equipment.
Out of the estimated 1 billion bikes, 125 million snowboards, and 50 million surfboards globally, many sit idle and collect dust in a garage or closet. There are platforms for all rental sports equipment.
Your bicycle or other sports equipment can be made available for strangers to rent. Owners set their rates and intervals (whether charged per hour, day, or week). The platform deducts a 17.5% fee from any transaction.
Spinlister insurances you for up to $10,000 if your equipment is damaged, misplaced, or stolen by a renter. Renters must sign a waiver form that lifts both the platform and the owner’s responsibility if an accident happens while the renter is using the equipment.
Spinlister also offers a pro version for premium services like enabling customers to pre-book sales, Zoom integration for a virtual appointment, and real-time rental calendar syncing.
Spinlister has been featured on Forbes, New York Times, Wall Street Journal, The Huffington Post, and NBC News. The brand has also partnered with celebrities like Oprah Winfrey.
30. Rent Out Your Boat
Another expensive investment is owning a boat — and more often than not, they are not used unless you list it on Boatsetter. With Boatsetter, people can borrow and use your boat; it’s a way to make money off your boat.
As with Spinlister, Boatsetter permits its users to configure the best times and dates to rent the boat, along with the specific type of client your targeting.
Boatsetter has around-the-clock customer support service. Second, both the renters and lenders can access the US Coast Guard database for emergency information. Third, approved captains are also available for consultation and boat maintenance. Lastly, Boatsetter runs a Cognito program, where each client’s identity is authenticated during the application process.
After a completed boat rental, the owner will receive 65-90% of the net income, depending on the agreement with Boatsetter. The daily revenue can vary from $400 to $700 a day on the income producing asset. The revenue will vary based on the type and quality of the rented boat.
What sets Boatsetter apart from other boat rental platforms?
Boatsetter was the first and only peer-to-peer boat rental platform to offer insurance. Their partnership with BoatUS and GEICO Marine provides boat insurance coverage while renting. It also provides on-water assistance using TowBoatUS.
31. Rent Out Your Clothes
People have excess clothes in their closets. Many are too expensive to throw out and too impractical to be worn regularly. In the end, these kinds of clothes take up much space without being used. According to DailyMail, the average woman in the US has 103 clothing items in her closet but considers the majority to be either ‘unwearable,’ too tight, or too loose.
If you’re in this dilemma too, I suggest that you try StyleLend. This is a peer-to-peer clothing rental platform that offers people temporary access to high-end brands like Saint Laurent, Chanel, Gucci, Prada, and Zimmerman, among others. It’s a terrific way to monetize the items collecting due and turn your clothes into an income producing asset.
To be a lender, start by providing a description and uploading a few photos of your fashion items. There is a waiting time of 24 hours because sellers have to pass through a rigorous standardization process of StyleLend to ensure quality and branding. Once approved, your clothing rental is up for grabs.
Borrowed products are sent to the borrower’s address within two to three days. If the product fits, they can borrow the item for up seven days before being shipped back to you.
StyleLend also has an insurance system with specific prerequisites. A lender must pay a $5 insurance fee for each rental. The clothes’ insurance premium covers minor stains, tears, and rips up to $50 in repairs. It also covers over $50 in replacement value due to damage. Aside from this, there is also a 20% commission to rent out your clothes on the platform.
Best Income Producing Assets Summary
Different methods. Different processes. Different profits.
Financial markets, financial instruments, real estates, entrepreneurship, and shared economies are just some of the best income producing assets. This has been the pathway of many people to achieve prosperity and wealth. Still, there are many ways to accomplish this goal — and when I say many, it means a lot!
But the most important thing is your natural creativity, dedication, and effort to earn extra money for the future. Whatever method suits you, remember to work hard, work smart, and work big for your future!
To end this article, let me leave you with a quote from motivational speaker Tony Gaskins:
“Don’t chase love, money, or success.
Become the best version of yourself, and those things