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Annual Passive Income Report 2024

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Annual Passive Income Report 2024

2024 was a great year for investors. The S&P 500 went up more than 23%! I didn’t think 2024 could top 2023, but I was completely wrong. This is why you need to keep investing. Anyway, our passive income also performed pretty well. After all was said and done, we spent less than our annual passive income. That was great. However, we have some changes coming in 2025. See the details below.

Passive Income is The Key

Passive income is the key to a successful early retirement. Once your passive income surpasses your cost of living, you’ve achieved financial independence. Money won’t be an issue anymore and you can do whatever you want. I retired before our passive income got there, but I had an alternate source of income – blogging. Luckily, early retirement worked out very well for me over the last 12 years. Our household income was good so we kept investing. That enabled our net worth to triple over this period and now we are quite comfortable financially. However, we have some big expenses coming up. Our son will graduate high school and goes to college in 4 years. That will be expensive, but we’re saving for it. Hopefully, we’ll have enough by then.

Currently, we support our modest lifestyle with a combination of these income streams:

  • Mrs. RB40 works full-time. She took a sabbatical in 2022, but she isn’t ready to retire yet. She’ll probably retire when our son graduates from high school.
  • I work on my blog for a few hours per week and generate a little online income. I also have a few other small side hustles.
  • Passive income from our investments – real estate crowdfunding, dividend stocks, and rental properties.

*FI ratio = passive income / expense

FI Ratio

The FI ratio is a simple measure of progress toward total financial independence. Once we reach 100%, then it may give Mrs. RB40 enough confidence to stop working full-time. She still doesn’t believe me when I tell her she can retire today. Personally, I think 100% FI ratio is overkill, but it’s better to err on the side of caution. Normally, financial independence means accumulating about 25-30x your annual expenses, which we achieved in 2012.

2024

  • Passive Income = $76,523
  • Spending = $63,086
  • FI ratio = 121%

Our FI ratio worked out well in 2024. All of our passive income streams were solid. Our spending was also lower than I thought. It all came together. I don’t think 2025 will work out as well.

*Sign up for a free account at Empower (used to be Personal Capital) to help manage your net worth and investment accounts. I log in almost every day to check our net worth and cash flow. It’s a great site for DIY investors.

2024 Passive Income

My passive income spreadsheet.

How We Generate Passive Income

Alright, here is the good stuff. I’ll summarize each passive income stream and keep a separate page for the details. These pages will be updated quarterly. Click through the links below to see the latest update.

  • Real estate crowdfunding – My goal is to increase our investment in real estate crowdfunding to $200,000. The last few years were iffy, but commercial real estate seems to be coming back. These days, I invest in apartment renovations with CrowdStreet.
  • Dividend stocks – Our dividend income should be stable over the next few years. I still like dividends, but I’ll focus on overall growth until Mrs. RB40 retires.
  • Rental properties – Currently, we have 2 rental units. One of our tenants just moved out and I plan to sell the rental condo. This will have a big impact on this income stream.
  • Interest – This is interest from our bank accounts and bonds.
  • Tax-advantaged accounts – Lastly, I count the income from our retirement accounts as a part of our passive income. Once Mrs. RB40 retires, we will be able to access these accounts via the Roth conversion aka. building a Roth IRA ladder.

More details on each stream of passive income.

Real Estate Crowdfunding Income: $15,278

I started investing in real estate crowdfunding in 2017. My experience has been mostly positive. I think this is a great way to invest in real estate. At this point in life, I don’t want to be a hands-on landlord anymore because working with tenants can be stressful. Repair and maintenance also take a lot of time and effort. Real estate crowdfunding is more passive and the sponsors have the advantage of scale and experience.

These days, I am investing with CrowdStreet. They’re the leading company in real estate crowdfunding and they have many commercial projects to choose from. CrowdStreet is great because you can diversify geographically. I’m not optimistic about the Portland real estate market so I prefer to invest elsewhere in the U.S.

Here is the spreadsheet of my RE crowdfunding investments. Also, some quick guidelines from my experience.

  • Don’t invest in ground-up projects. You never know what will happen with the construction.
  • Don’t invest in an office building, healthcare, or retail. Some will work out and some won’t.
  • From now on, I’ll mostly invest in apartment renovations. The income is good and the chance of losing money is lower. The sponsor can always sell the apartment to generate some returns.

Active real estate projects 2024

  1. CrowdStreet Washington apartment – This is a project in Puget Sound. They seem to be fine, but didn’t send much money last year.
  2. CrowdStreet Chicago office building – This project finished renovation, but the commercial office market is still in trouble. They made a capital call, but I didn’t participate. Recently, they are trying to pivot the building toward the data center market. I’m not sure how this will work out, but I’m not very optimistic. We probably will lose some money on this project.  
  3. CrowdStreet Senior housing – This is a fund to invest in senior living facilities. I heard one of the senior facilities is having some trouble. This will reduce the total return from this fund. It’s a bit worrying, but the other facilities are doing fine. We’ll have to wait and see on this one.   
  4. CrowdStreet NC apartment – This is a project in North Carolina. It seems to be doing fine.
  5. An apartment in Arizona – This project exited successfully and sent back a great profit.

Rental Property Income: $7,260

2024 was one of the best years we had as a landlord. The tenants were great and didn’t cause any problems. We didn’t have a lot of repair and maintenance either. All in all, it was a great year. However, a tenant is leaving and I’ll put the condo up for sale. Portland real estate market is terrible. This condo’s price hasn’t increased much in 20 years. It’s just sad.

At this point in life, I’d rather invest in other locations through RE crowdfunding. Being a landlord is a great way to build wealth, but we plan to move to California after our son graduates from high school. Also, I don’t want to be a landlord anymore.

*New investors can start with this – How to Start Investing in Rental Property.

Dividend Income: $15,286

Dividend income is my favorite form of passive income. Investors own a small part of these public companies and they work for you. Recently, I changed my focus from dividends to total portfolio growth. Mrs. RB40 plans to keep working for a while so we don’t need the income. It’s better to delay paying taxes until our income is lower. When Mrs. RB40 retires, I’ll refocus on dividend income. If you’re a new investor, here is a helpful post – How to Start Investing in Dividend Stocks.

As for reinvestment, I don’t DRIP. I just accumulate the dividend and invest in an index fund or real estate crowdfunding.

For new investors, I highly recommend Firstrade. Firstrade is an excellent discount brokerage that I used for many years. Many of their trading fees are $0 now. That’s great news for young investors. I remember paying $80 per trade when I started investing.

Tax-advantaged Income: $35,985

New investors should read these posts first.

The money in these retirement accounts isn’t easily accessible at this time (I’m 51), but they still count as passive income. Once we both retire full-time, we’ll build a Roth IRA ladder to access our traditional IRAs so we don’t have to pay the 10% early withdrawal penalty.

2024 Passive Income Wrap-Up

2024 was a great year for us. Every passive income stream was solid. In particular, real estate crowdfunding came through with a nice payout from a completed project. However, there are 2 projects in trouble so RE crowdfunding doesn’t look so good for the next few years.

The rental income was also very nice last year. However, this income stream will collapse after the tenant leave. I’ll sell the condo and reinvest the proceeds in something more passive.

2025 will be a transitional year. Our passive income probably will be lower. Hopefully, our spending won’t grow too much. We’ll see how it goes.

What about you? Do you have passive income?

Real estate investment should do well over in the long term. We have a housing shortage in the US and people need to live somewhere. Check out CrowdStreet if you want to generate passive income from commercial real estate. It’s way easier than being a landlord. Although, I’m not sure how the increasing interest rate will change things. It probably will be more difficult to exit a project if the rate keeps rising. Stay tuned.

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.

Disclaimer: This story is auto-aggregated by a computer program and has not been created or edited by budgetbuddy.
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