Many people live paycheck to paycheck, seemingly never having enough money at the end of the month to save or put towards a vacation. It can become frustrating and depressing to live like that. If you are in this situation, you may want to try to climb out of it by generating passive income.

There are two types of income: active and passive. Most folks are familiar with active income. This is where a job, task or service is performed and pay is rendered for doing it. It requires effort. Once paid, the worker must actively continue to perform in order to get paid again.

What Is Passive Income?

Passive income, on the other hand, comes on a regular basis while a person is working or not. In fact, money often comes in when engaged in other activities, like sleeping, travelling or volunteering. Notably, the dollars earned passively have the same value as those earned actively.

Generating several different streams of passive income is quite healthy for everyone’s financial life. It can provide additional income over and above what is earned from employment or a job. It can free up time to spend on other worthwhile activities. Indeed, as folks build up their passive income streams, they can even quit their jobs, if so desired. Many millionaires and independent individuals became wealthy, in part, by creating and maintaining several robust streams of passive income.

What Kind Of Real Estate is Best for Passive Income?

People often turn to real estate to generate passive income. Indeed, certain types of real estate investments are tailor made for the generation of passive income. Two types in particular are Real Estate Investment Trusts (REITs) and Turnkey Rental Properties.

REITs are the perfect vehicles for passive real estate investing. Their main advantage over other forms of real estate investing is that you do not need to do any work. REITs generally pay out from 3% to over 8% return. The income is paid out quarterly, or in some cases, monthly.

Turnkey Rental Properties are another type of real estate investment that requires little work. Essentially, the investor buys an up-and-running property that already has rent-paying tenants. The main up-front work needed is to research property rental companies that offer turnkey investments.

How Do You Get Started Collecting Passive Income?

Perhaps the best way to receive passive income from real estate is by investing in REITS. These securities, representing ownership in viable, rent-paying properties, are like stocks in that they are bought and sold in the marketplace through a brokerage account or via a mutual fund. Examples of well-known REITs are Realty Income Corporation (O), Ventas (V), Digital Realty (DLR) and Welltower (WELL). Many mutual funds, such as the Vanguard REIT Index Fund or the Fidelity Real Estate Fund, make for easy investing in a diversified portfolio of income-generating properties.

In addition, other methods of obtaining passive income are easy to start, as outlined below. Several streams of passive income can be easily created by adding one or more of these to an investment in REITs.

Other Common Forms of Passive Income

In addition to real estate, there are a number of other ways that people generate passive income. Some of these include:

• Peer-To-Peer Lending
• Stock and Bond Investing
• Establish A For-Profit Blog
• Build An App
• Use Cash-Back Credit Cards

Some of these, such as building an app or developing a for-profit blog, may require some up front effort. However, once this initial phase is completed, these income streams can run essentially on autopilot. Peer-to-peer lending as well as investing in stocks and bonds require an initial outlay of capital, but the returns, in the form of dividends and possible capital gains, are 100% passive. A super-easy route to passive income is by using cash-back credit cards for all your regular purchases. Many credit card companies offer these types of cards.