Aug 4 • Q & A
What is the best way to create passive income with no (significant) savings?
The best way to build passive income from scratch depends on several factors. Our credit score, skills, savings (if any), as well as prior experience all play a role.
Why is the credit score important? It is only important in the US or in a country with a similar financial system. Without an average or better credit score it becomes a lot harder to get a real estate or business loan.
Don't have a good credit score? No problem, there are still many ways to build passive income (I'll share one below).
Passive income is not a get rich quick scheme. We need a solid strategy as well as good execution paired with patience to see results.
When I bought my first real estate property, I did not have a good enough credit history nor a stable enough income to get a decent loan from a bank. My parents agreed to co-sign with me, since I had a proven track record with them on being true to my word.
This might seem like a handout to some, but they did not help at all with paying my loan or other expenses. I was old enough to manage these responsibilities on my own.
I do not recommend co-signing, even if family members are involved. This option should be reserved for very special and low risk circumstances.
But I want to share it here as example. Sometimes we have to find an unusual path to acquire the first asset that can generate passive income for us. I did not buy my first property for the purpose of creating income. It was just a practical option I had seen work well for my parents.
If I was trying to earn passive income from real estate today, I would look for an affordable property (maybe a condo) which is just good enough for me to live there. I would find a way to buy it for a good deal and rent all rooms except for mine out to roommates.
There are two strategic reasons for doing it this way:
- Banks are more likely to give you a good loan on a property you plan to occupy yourself.
- Roommates help with freeing up cash flow, so I don't need to use all of my active income for paying bills.
It is much better to have cash flow available for other passive income investment opportunities.
But what if our credit history is either bad or non-existent? What if we cannot find a parent to co-sign with us?
In that case my first course of action would be to invest in the stock market. This can be small at first. While I build up a balance of $500-$1,500 with a little portion from each paycheck, I would learn all I can about selling stock options for creating cash flow.
Once my portfolio balance has reached that target, I would sell a put option on a valuable company with a low or at least reasonable price. This creates the first cash flow and helps my portfolio as well as my passive income grow faster.
If you want to learn more about this strategy and how to implement it in a low-risk way with experienced support, please consider joining our option sellers community at saltmoneyoptions.com .
4
1 comment
What is the best way to create passive income with no (significant) savings?
powered by
skool.com/salt-money-passive-income-4848
Passive income is the key to true financial freedom. If you're ready to save time and money creating your first or next income stream, this is for you
Suggested communities
Powered by