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What Is Passive Income?

Updated: Aug 9, 2022

What is passive income? Well, in loose terms it means that you are earning money with little to no effort on your part. It means you don’t have to get up at 7AM to go drive to the job and work for it. For example, you may have worked all of your life for your pension (if you get one), but generally, you are not physically working for it any longer if you are retired. It just shows up in your bank account monthly.

In the case of investments, things like stocks, bonds, day trading, etc. that would generate passive income because you are not physically doing anything to generate the proceeds. Notice, I didn’t include a couple of other real estate related passive income strategies like rental homes or Air BnB’s. That’s because in most instances, unless you are investing in some sort of fund or just the lender, these investments can certainly require some involvement on your part, therefore, making them more active than passive.

The same could be said about note investing as well. There are ways in which note investing can be passive. If you are just investing in a note fund and receiving a predetermined return on your investment, that would be considered passive. If on the other hand, you are investing in notes by running it as a business, dealing with servicing companies, lawyers, buyers, sellers, etc… that is considered actively investing. Even with that, note investing is still less involved passive income than dealing with brick-and-mortar real estate investing like flipping or rentals.

There are several different streams of passive income to be had doing notes. It really all comes down to the exit strategy you choose and how passive you really want to be.

Here are a few:

Profit Income – If you decide to sell the note.

Interest Income – Income made from the monthly payments from the borrower.

Dividend Income – Income from a note fund.

Rental Income – Income from the asset if you decide to foreclose on it and keep it as a rental.

There are so many versatile ways to earn passive income investing in notes. Even if you decided that you want to be a little more involved, note investing can lend itself to many different streams of income.

Happy start to the summer! Here’s to getting back out in the world safely!

For more information on notes or if you have notes to sell, reach out to Zee at Awanna Holdings, LLC (571)659-5005. ©Awanna Holdings, LLC (Jun 2021-3) - NoVa Notes Meetup Group

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