Passive Income / Business Ownership

K

Koenigsberger_Katjase

Well-Known Member
I wanted to get some input and potentially turn this into a general discussion thread.

I am currently stocking away nearly €4000 per month and due to some glucky real estate moves in my young age I have about $120,000 USD from when I bought a house in Phoenix during my flight training.

I am looking to turn this into passive income so that I can not have to worry about the inevitable collapse of European aviation (which I think is coming sooner than later), and I can spend my time doing fun things (running marathons, learning languages, drinking in the daytime) instead of not so fun things (getting on the bus to the airport at 3AM while everyone else is drunk or homeless)

Okay so, that being said, what should I do?

Constraints:
Buying a house to rent out in Germany is not possible with the money I have on hand
I could buy a house in the US and rent it out, but it may be hard to do that from here
I could potentially move to the US (dual passport) and purchase a business that I could run (I would like this a lot I think)
Or develop/buy a business that is location independent (probably my best option)

Does anyone else here pursue passive income opportunities or run side businesses? I'm not handy at making things, so I don't know what I could sell that I make like some rest pilots I fly with do (and my apartment has not much room).

Interested in hearing everyones contributions.

Thanks!
 
If you're putting away 4000 euro a month, you don't need a side investment. That's way more than any immediate investment will get you, so don't lose that money source.

I wouldn't put it all into one thing, because any single venture has a chance of failing.

Real estate is a *relatively* safe bet, assuming you understand the legal side, landlording, and find a good deal. You should become an expert in those 3 things if you really want to succeed. This has the least chance of total, 100% failure.

Some kind of online business is also a low-risk, usually low-capital way to start out, but you must: A) be passionate about the business, B) find a niche that isn't already served, and C) provide a high-quality service/product. Again, you should strive for excellence in those 3 fields. 90% chance of failure, so YMMV.

But I love business, so I would do it.
 
In my experience rental property is far from passive, especially in residential where you will probably end up with tenants who call you when it's time to change a light bulb. Consider investing your income in a diversified portfolio of stocks that pay dividends.
 
Rental properties can certainly be passive, as long as you get them cheap enough to be able allocate 8-10% of revenue to property management services, which is relatively easy. Most of our clients have virtually no involvement in their properties at all, and just receive a direct deposit every month.
 
Invest the 120K (personally, I use a manager but you'll have to decide if it's worth the cost) and put away as much of the 4K/month as you can into a retirement fund. You don't have enough capital to live off the dividends at this point so continue building.
 
milleR said:
Invest the 120K (personally, I use a manager but you'll have to decide if it's worth the cost) and put away as much of the 4K/month as you can into a retirement fund. You don't have enough capital to live off the dividends at this point so continue building.
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My retirement fund is a government backed pension. I want to use the money to bridge me to that pension.
 
Koenigsberger_Katjase said:
My retirement fund is a government backed pension. I want to use the money to bridge me to that pension.
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Well that's a good deal. Still, you will need to continue to build your capital base if you want to have a livable amount of passive income. I don't know your expectations, but just for example to maintain a standard of living based on 48K/year you would need 1M paying 4.8% annually. Or a rental property netting that kind of monthly rent after taxes, management fees, et al. Now, if you're planning to generate income yourself then you've got a great start but it won't be "passive" by any stretch of the imagination. My suggestion would be to speak with a financial adviser and put as much as you can into investments right now while you're young.
 
ppragman said:
Even if you have money simply sitting in the bank, you need to manage it intelligently to make sure it doesn't dwindle. All income will require some work.
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False. You can dump money into a conservative fixed income fund and never do anything with it. Passive in every sense of the word.

But from a legal standpoint, a lot is considered passive income. Even rental properties that you manage yourself is considered passive income by the IRS for the vast majority of people.
 
My thoughts:

1. Nice picture

2. Real Estate

3. Relatively safe stocks (Utilities and REITS) that pay a steady dividend and will hold their value over the long haul. I personally have my stock investments split into 2 accounts, one (my Roth) reinvests the dividends. The other, the dividends are not reinvested and I draw them out of the account once per year to help pay down my student loans.

That said, number 2 is the best route, I'm currently saving money for next rental property.

Good Luck!
 
Koenigsberger_Katjase said:
My retirement fund is a government backed pension. I want to use the money to bridge me to that pension.
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Move to someplace very very cheap. My best friend more or less retired in Vietnam at 27. You could probably live very well there forever right now.

I am tempted to go back to being unemployed in Holland and Germany. It was really nice.
 
Trip7 said:
Unless you own a large real estate business with scale like @ATN_Pilot , the numbers work out better for stock market investment http://www.cnbc.com/id/102249202
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It's no so much a matter of scale. It's more about knowing what you're doing. If you do, you can make money in real estate even with just a few tens of thousands of dollars, because of how you can leverage in the real estate world. But you really need to have a real estate license and know what you're doing.
 
HVYMETALDRVR said:
My thoughts:

1. Nice picture
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Thanks, but many will disappointed be with my hair being much lighter in real life :(

2. Real Estate

3. Relatively safe stocks (Utilities and REITS) that pay a steady dividend and will hold their value over the long haul. I personally have my stock investments split into 2 accounts, one (my Roth) reinvests the dividends. The other, the dividends are not reinvested and I draw them out of the account once per year to help pay down my student loans.

That said, number 2 is the best route, I'm currently saving money for next rental property.

Good Luck!
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Yes but living in Europe where rentals are prohibitively expensive and having to manage an American property from here are a little overwhelming.



Trip7 said:
Unless you own a large real estate business with scale like @ATN_Pilot , the numbers work out better for stock market investment

http://www.cnbc.com/id/102249202
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I don't know if I agree

drunkenbeagle said:
Move to someplace very very cheap. My best friend more or less retired in Vietnam at 27. You could probably live very well there forever right now.

I am tempted to go back to being unemployed in Holland and Germany. It was really nice.
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I would only live in Europe or the US. I spent some years growing up in other places and wowowow no thank you :)
 
Koenigsberger_Katjase said:
Thanks, but many will disappointed be with my hair being much lighter in real life :(



Yes but living in Europe where rentals are prohibitively expensive and having to manage an American property from here are a little overwhelming.





I don't know if I agree



I would only live in Europe or the US. I spent some years growing up in other places and wowowow no thank you :)
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I'm pretty sure most guys aren't gravely concerned about your hair color. :)

Sorry I should have read your first post better, I've heard the demand for housing in Germany is crazy. I once met a German who couldn't attend school one semester because he couldn't find housing close enough to make the commute worth it, crazy.

That said, if you can work out buying a house in the US and have someone else manage it? Might not be a bad deal, though after the mortgage, maintenance, insurance, management fees, etc. you probably won't have a lot of money left over, but at least it's free equity.

Also you could look at REITS? (Real Estate Investment Trusts) I know nothing of the REIT market in Europe, but here in the US its pretty good, it allows you access to the US real estate market without buying property here like I stated above. You can also diversify between commercial, housing, medical offices, etc. just in the REITs. Right now, in this environment of rising interest rates I know fixed income vehicles aren't as favorable, but if you just looking for some cash flow? Might be okay, I myself would probably wait another year or so, but the markets here in the US are relatively safe compared to what is going on in Europe right now (as you said).

What other places have you lived?
 
HVYMETALDRVR said:
I'm pretty sure most guys aren't gravely concerned about your hair color. :)
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Maybe... But it is from a time when I thought dark hair was sexy, how wrong I was :)

Sorry I should have read your first post better, I've heard the demand for housing in Germany is crazy. I once met a German who couldn't attend school one semester because he couldn't find housing close enough to make the commute worth it, crazy.
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In Berlin it's pretty bad now with investing owners. Prices are up almost 3x in 10 years

That said, if you can work out buying a house in the US and have someone else manage it? Might not be a bad deal, though after the mortgage, maintenance, insurance, management fees, etc. you probably won't have a lot of money left over, but at least it's free equity.
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I don't really know if that's the best idea if I'm looking for passive income to buy a property which generates only equity

Also you could look at REITS? (Real Estate Investment Trusts) I know nothing of the REIT market in Europe, but here in the US its pretty good, it allows you access to the US real estate market without buying property here like I stated above. You can also diversify between commercial, housing, medical offices, etc. just in the REITs. Right now, in this environment of rising interest rates I know fixed income vehicles aren't as favorable, but if you just looking for some cash flow? Might be okay, I myself would probably wait another year or so, but the markets here in the US are relatively safe compared to what is going on in Europe right now (as you said).
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I will have to research this. I do not invest in things I do not understand, so this seems confusing to me.

What other places have you lived?
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Nowhere good. Eastern Europe / Central Asia and South America
 
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