For years, many thought that renting out real estate would be the way to create passive income. And granted, back when interest rates were around 2%, that’s basically free money, given inflation was so low!
However, times have changed. Real estate prices are high, and interest rates even higher. This is why today, we’re going to focus on renting out other items — ones that won’t require to take out a loan and can bring in cash immediately … without the risk of pesky tenants.
Rental options
There are many options when it comes to renting out items, and those go far beyond renting out your home, property, or even your car. Instead, those seeking passive income should consider finding niche products consumers will want now and again—not enough for them to make a purchase, but rather use once in a while.
Some of these items might include outdoor gear. Consider buying some top-notch camping equipment, hiking gear, bicycles, kayaks, or even paddle boards. Many people choose to rent these for occasional use rather than purchasing them outright.
Party events are another strong option. Party tents, tables, chairs, sound systems, projectors, and other event supplies for weddings, birthdays, corporate events, or other special occasions can be costly. But not if you rent them out and undercut the market.
What you could earn
These options could provide you with a solid passive-income stream. If you pursue a few of them, you could be making thousands per year! Granted, it will cost you to make the purchase. But it won’t mean a loan. For instance, let’s say you purchase a party tent at $1,000. You then rent it out for an average of 20 events for the year at an average of $200 per day. That’s at minimum $4,000!
Then you choose to buy kayaks. Again, you spend $1,000 on a kayak. Then, considering seasonal demand, you rent it out at an average of $40 per day for 100 days of the year, which is, again, around $4,000.
Choose a dividend stock
Now, that passive income is great. But it could be made even better by putting that into a dividend stock. One that would fit your theme and provide safety and security right now would be Canadian Tire (TSX:CTC.A).
CTC currently offers a 4.91% dividend yield, as well as returns of 13% since 52-week lows. So, let’s say you take that $8,000 you made altogether and put it towards CTC stock. Here is what that might look like in the first year should CTC rise another 13%.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| CTC – now | $142 | 56 | $7.00 | $392 | quarterly | $8,000 |
| CTC – 13% | $160.46 | 56 | $7.00 | $392 | quarterly | $8,985.76 |
You could make $8,000 in passive income, $985.76 in returns, and $392 in dividends. Altogether, this would total $9,377.76! That would average out to $781.48 each and every month.
So, don’t believe what you hear about rentals. You can find applications to help you along the way — easy methods to rent out niche products. And at the end of the year, you could have almost $10,000 to show for it.
