If you were relying entirely on your employer for your earnings, you wouldn’t have any money coming in. If you’re laid off from your job, you still have money coming in. Suppose you have several streams of income in addition to a full-time job. Having additional income streams can help to create income stability. One of the things he learned is that well over half of the millionaires he studied have at least three streams of income, and many have even more than that.īut regardless of whether you strive to be a millionaire someday, there are reasons to add some streams of extra income. One author, Tom Corley, looked into the question of multiple revenue streams when writing his book “Rich Habits.” More specifically, he looked into the habits of millionaires for five years. Owning a rental property can be a significant time and labor investment, especially if you’re maintaining the property yourself. It’s important to note that whether rental income qualifies as passive income has nothing to do with how much time you spend on it. According to the IRS, you qualify as a real estate professional if more than half of the services you perform in a year are in real property trades or if you performed more than 750 hours of service during the year in real property trades. Rental activities also don’t count as passive income if you’re a real estate professional. As a result, many property owners (though not all) using sites like Airbnb to rent out their homes can’t count those funds as passive income. For example, as of March 2020, rental activities generally don’t count as passive income if the amount of time for which customers rent the space is under one week. There are some exceptions to the IRS definition of rental activity. Rental activity refers to a situation where you rent your property to customers, and the money you receive is primarily due to the money the customers paid for the use of the property. Income that you make from a rental activity is a type of passive income, even if you materially participate.
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