What are the best income producing assets to buy with little money?
The best income producing assets to buy with little money will help increase your cash flow. Dividend stocks, Peer-to-Peer lending, real estate crowdfunding, rental properties, and low-cost businesses are inexpensive assets for income. Each asset can be purchased with small amounts of money, but can lead to significant profits.
Imagine, investing your first $100 and receiving a cash payment every month. As you continue to invest, the dividends you receive increase over time.
Cash flow is amazing!
Luckily for you, I’m going to show you how to build wealth with cash flow. You can start investing for cash flow even if you only have $100 to start. The more money you can invest, the larger your returns can be.
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The best income producing assets to buy with little money
The best income producing assets are easy to obtain with little money. Each asset provides consistent cash flow, which you can reinvest. Dividend stocks, Real Estate, P2P lending, and certain businesses can produce an income while purchased for a low-cost.
No investment is risk free. You should plan your investment strategy according to your risk tolerance.
Learning about each type of investment can help reduce your risk. Most new investors jump into an investment without a full understanding.
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Dividend stocks are shares of a company which pay a cash payment. The company has no better growth opportunity and has decided to reward investors with a dividend. Investors may purchase dividend stocks to increase their income as long as the dividend is maintained.
A company which pays a dividend will specify the dividend and dividend frequency. For example, a company may specify a $0.50 quarterly dividend. Over one year, you would get $2.00 in cash payments.
Dividend yield is the percentage of dividend payment to share price. For example, a company with a $100 share price that pays $2 in a year has a 2% dividend yield.
What makes dividend stocks amazing are the dividend pay increases. Most dividend investors see a dividend increase as a pay raise!
For example, a company might pay a $0.50 quarterly dividend one year and then increase it 10% or $0.05 the next. So owning 100 shares the first year would yield $200. After the company increases the dividend payment, you’re now earning $220 per year.
Therefore, dividend investors look for dividend sustainability with future outlook for increases.
Peer-to-Peer Lending involves lending your money to individuals and businesses who need a loan. The person or business pays back the loan, with interest. Essentially, P2P lending is like the bank system, but it allows you to be the lender.
The biggest risk with P2P lending is loan defaults. You’re lending your money to people with the intention they’ll pay back the loan. However, some people may declare bankruptcy or default. Basically, you’d lose whatever money hasn’t been paid back.
However, proper diversification can limit the impact a default has on your cash flow. Typically, with P2P lending you’re buying a $25 share of a loan, not the whole thing. Buying multiple loans, you would hardly notice if one person defaulted.
P2P lending is a good way of investing money without the stock market. The money isn’t subject to the same fluctuations as stocks, but may still be impacted by economic downturns.
You can invest in P2P lending with as little as $25, but it’s recommended you buy 100 different loans. Therefore, the minimum investment is recommended to be $2,500.
To summarize, your cash flow comes in the form of interest paid back on a loan. You should invest a minimum of $2,500 for diversification. P2P lending is seen as an illiquid investment as your money is tied up in a loan.
Real Estate Crowdfunding
Real estate crowdfunding allows you to invest in real estate with minimal investment. You don’t actually have to purchase rental property yourself. Essentially, you are giving a company your money to invest in income producing assets like apartments or single family homes.
Companies like Fundrise give you the ability to invest in real estate with $1,000 minimum investment. You can select if you want a portfolio of supplemental income, growth, or mixture of both.
As of writing this, Fundrise is projecting a 2.9-3.2% dividend yield on their income portfolio. Therefore, every $1,000 you invest would make $30 in income. However, the fund is also projected to grow 5.1-6.4%! Your total returns are between 8.0-9.7%.
Just like P2P lending, your investment is outside the stock market. However, certain economical impacts can affect your investments.
Your investments are tied up in physical real estate projects, which makes them illiquid. The best part about the investment is you are owning real estate, without having to manage properties.
Real estate is one of the top choices for people looking to generate cash flow. You don’t have to invest with a company. Instead, you can buy real estate on your own which carries more risk and more reward.
Real estate appreciates, pays monthly cash flow, and builds equity. Therefore, you have three powerful methods of building wealth.
Owning your own piece of real estate takes a lot of work to manage. You should factor in property management fees to help automate the process.
Generally, your minimum investment is a 20% down payment. Some investors put more or less of their own money into the down payment, but it’s dependent on your risk tolerance.
So how much income does a real estate asset produce? Your income depends on each property. You may find a property which rents for $1,200 and has budgeted $1,000 for expenses. Therefore, you’d generate $200 in free cash flow.
Gum ball and Vending Machines
Gum ball and vending machines can be a fun investment for cash flow! Gumball machines are really cheap to purchase, but can make $30-70 per month in cash flow. The hardest part about investing in vending machines is securing good locations.
You can typically buy a gum ball machine on Amazon or eBay for $150. If your machine averages $50 per month in cash flow, then you’d pay it off in three months!
Website investing takes skill, but can be a good source of monthly income. Typically, you can see ad revenue around $15 per thousand pageviews. A website which has 100,000 pageviews per month could be making $1,500 in cash flow very passively.
However, $15 per thousand pageviews is just an average. Some websites earn $25-$35 per thousand pageviews.
Ad revenue tends to be a small fraction of your income source. You can sell products or courses to supplement your cash flow.
Websites are relatively inexpensive to purchase. Therefore, you can buy an existing profitable website and make up your investment in a short amount of time.
For example, you might find a website selling for $20k which produces a monthly income of $1,000. Your initial investment would be earned back in 20 months, leaving you with a free cash flow of $1,000 per month.
You can create and sell digital products which produce a recurring income every month. Start with learning specific knowledge, create a product, and learn to sell the product. Fortunately, you can offer an affiliate commission and let other people sell the product for you.
For example, let’s say you know a lot about losing weight. You could create an informational product which helps people lose weight. The course sells for $47.
You offer an affiliate program, which gives someone 50% of the sale price for referring business. Therefore, you and your affiliate make $23.50 when a sale is made.
Once your product has been built, you just need to find your affiliates. Eventually, you’ll have enough affiliates to produce consistent income. Your product continues to be an income producing asset.
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Summary: Best income producing assets to buy with little money
As you can see, there are plenty of income producing assets to buy with little money. You just need to find one asset and focus your efforts on building passive income. As time goes on, your assets continue to build your income.
The best income producing assets include:
- Dividend stocks – buy a share of a company. The company pays you for being an investor.
- P2P Lending – lend your money to people and businesses. You are paid back in the form of interest.
- Real Estate Crowdfunding – buy real estate by giving your money to companies who buy real estate. You don’t need the full cost of the property, so you can start with $1,000.
- Real Estate – typically involves securing a bank loan to buy properties. Your tenants pay rent, which ideally provides positive cash flow.
- Gumball and Vending Machines – buy gumball vending machines for cheap on eBay or Amazon. Find a location and recoup your investment in a few months.
- Websites – specific skill required, but great income potential for those who take the time to learn. You can buy websites fairly inexpensively.
- Digital Products – Create a product around your specific knowledge. Get affiliates to promote your product. Continue to get sales passively.
Most of these investments can be purchased with less than $5,000. However, real wealth is built with the more money you add to your investments.