Ask HN: What passive income investments exist to supplement your salary?

#1

Post by cgb223 » Mon, May 10, 2021, 4:38 PM UTC

I was reading this article (https://themdpreneur.com/purchase-future-cash-stop-buying-more-stuff/) on HN the other day and it talks about a hypothetical person who buys a condo and rents it out, or a vending machine and has it serviced, and a website that brings in income.

I come from a fairly traditional investing background of purchasing equities or ETFs as my primary investments, and am interested in learning what else is out there in a non-traditional sense like the above?

What other kind of passive income or cash flow helping investments are out there?

Re: Ask HN: What passive income investments exist to supplement your salary?

#2

Post by brundolf » Mon, May 10, 2021, 4:44 PM UTC

I would point out that renting out a condo is not a passive investment; keeping up with tenants, doing cleaning and maintenance, etc. can be a full-time job (maybe less so for a condo than a house, but still). And as we here probably know, maintaining a website is not necessarily passive either, and I would imagine the same is true of a vending machine. These are projects, and at some point they become businesses; not simply "here's my money, make me more".

Re: Ask HN: What passive income investments exist to supplement your salary?

#3

Post by seibelj » Mon, May 10, 2021, 4:45 PM UTC

Compound will give you a risk-free 6.3% APY (other than the risk of smart contracts) on USDC (digitized dollars) https://compound.finance/markets/USDC

Re: Ask HN: What passive income investments exist to supplement your salary?

#4

Post by justinzollars » Mon, May 10, 2021, 4:52 PM UTC

seibelj wrote: post #3

Compound will give you a risk-free 6.3% APY (other than the risk of smart contracts) on USDC (digitized dollars) https://compound.finance/markets/USDC

Nothing is risk-free. There is political risk (it gets outlawed), technological risk (it gets hacked), theft risk (it gets stolen), a comet hits the earth risk etc etc.

Re: Ask HN: What passive income investments exist to supplement your salary?

#5

Post by theplague42 » Mon, May 10, 2021, 4:54 PM UTC

The rate of return on investments is proportional to the risk and/or effort necessary to make it work. Contracting out the management of things like condos, vending machines, etc. destroy the vast majority of any gross profit. Investing in a large-cap, high-dividend mutual fund (Vanguard, etc.) will generate reasonable returns with 0 effort on your part. Just cash out your dividends rather than re-invest.

Re: Ask HN: What passive income investments exist to supplement your salary?

#6

Post by chillacy » Mon, May 10, 2021, 4:55 PM UTC

One which I'm curious about is buying software businesses with existing user bases and adding new features, kind of the equivalent of buying a fixer upper, but it uses my unique skills.

Re: Ask HN: What passive income investments exist to supplement your salary?

#7

Post by throwaway088 » Mon, May 10, 2021, 4:55 PM UTC

So, about renting, I bought a single family home for $500k in bay area. It now is worth $1M. Gets me rent before expenses of $40000. So far, I have spent about $5k per year on. Repairs etc. So effectively, I make about $20k after taxes, repairs, mortgage interest etc. Overall, I spent $350k by way of downpayment, mortage interest payment, etc. No major tenant issues.

Hence, I would peg my return on investment of 5% if I do not account for increase in price of the house. If I do, it would be around 10% which is what FAANG has been giving me, with much less hassles.

Decide for yourselves if this is passive enough for you.

Re: Ask HN: What passive income investments exist to supplement your salary?

#8

Post by jcun4128 » Mon, May 10, 2021, 4:57 PM UTC

chillacy wrote: post #6

One which I'm curious about is buying software businesses with existing user bases and adding new features, kind of the equivalent of buying a fixer upper, but it uses my unique skills.

Are there any good sites that do that... seems like they're filled with sites that are hard to verify if they're legit.

Re: Ask HN: What passive income investments exist to supplement your salary?

#9

Post by dangwu » Mon, May 10, 2021, 4:57 PM UTC

throwaway088 wrote: post #7

So, about renting, I bought a single family home for $500k in bay area. It now is worth $1M. Gets me rent before expenses of $40000. So far, I have spent about $5k per year on. Repairs etc. So effectively, I make about $20k after taxes, repairs, mortgage interest etc. Overall, I spent $350k by way of downpayment, mortage interest payment, etc. No major tenant issues. Hence, I would peg my return on investment of 5% i…

In hindsight, was it worth it compared to just investing all that money into the S&P500?

Re: Ask HN: What passive income investments exist to supplement your salary?

#10

Post by Havoc » Mon, May 10, 2021, 4:58 PM UTC

I’ve got a share portfolio that generates a couple bucks a day in short share lending.

Literally just tick a box to give broker permission. Nothing is risky free but looked into it and as best as I can tell it’s a pretty good deal. No inconvenience, not much risk etc