How to generate a rental income? Passive Income Guide

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You can generate income by renting out your properties. The Passive Income generated by renting your properties like a home or for storage, you can call it rental income. In this type of passive income, you do not have to do anything. You have to just advertise your property as it is available for rent.

When you rent your property, the person who takes your property on rent can use it as his own. He will in return provide you a monthly, quarterly, or annual rent. Here is a win-win situation as the other person will get the property to use and you get a monthly payment.

What’s in it for me?

  1. Type of rentals
  2. Earning money by renting
  3. Ways to rent your properties
  4. Some real-life examples
  5. Rental income vs Business income
  6. Rental income vs Earned income
  7. Conclusion
  8. FAQs

Let me tell you about my uncle, He lives in Ghaziabad (a city in Uttar Pradesh, India) and he has a property in Kanpur (a city in Uttar Pradesh, India), so he decided to make a 3 story building in which 2 families can live in a story.

So he takes 5000 Rs. From each family and he got 30,000 Rs. each month from rental income. Back then I was a kid but now I realize that it is a very good option to generate money. Some people are working so hard to make this much amount and he makes this amount every month without working.

People who have their home and they are not living in the whole house can rent a floor to anyone so this can be good for both of them as they will get a place to live and you will get a certain amount of rental income every month.

Types of rentals

There are many types of rentals by which we can generate rental income.

  1. Residential Rental
  2. Commercial Rental
  3. Industrial Rental
  4. Renting Vehicles
  5. Renting other goods

Residential Rental

When we give our properties on rent to any paying guests. We can make a hostel (PG). That is called Residential Rental. Single-family homes, multiple-family homes, apartment complexes are considered as a residential rental property.

Residential rental

Commercial Rental

When we rent our properties to be used commercially like shops, offices, banks, etc. That is called Commercial Rental. Commercial properties are those properties that are used for business use.

Commercial Rental

Industrial Rental

When we rent our properties to be used as industrial purposes like any company sets up its plant on your property or it utilizes to make products. That is called Residential Rental.

Industrial rental

Renting Vehicle

Passive income can also be generated by renting vehicles. People can take your vehicle and use them. You can charge them by kilometer basis or by day basis it is up to you. My friends have gone on many trips by renting vehicles.

Renting Vehicle

Renting goods

Passive income can also be generated by renting the things you have. Any kind of machine can be rented to other persons. People take machines on rent and then they can also make money from that. As a person takes welding machines on rent an then he makes money from that to pay the rent.

In rural areas everyone can not afford machinery like threshers etc for their crops so they take that machine on rent and return it when they use it. So machines can also be rented and passive income can also be generated by renting goods.

Earning money by renting

You can earn rental income by renting properties or your home or any other property for different usage for anyone. People nowadays do their business they need properties to make offices and they also provide a good amount of money. If you have so many properties then you can use them to generate passive income. Like banks, ATM all needs properties for making their branches.

You can also buy shops in a shopping mall then rent it out to anyone. Renting has quite good potential. It carries the potential to generate a good monthly rental income. So if you want to generate a good and fixed amount every month then consider renting, if you have properties. If not buy some, invest your money in assets like this. Which can make you money in your hard times.

For renting your property location is also a major factor. People want to rent properties where they can access most of the facilities. People don’t rent properties in rural rather they prefer to move to urban areas to take the residential rental.

Ways to rent your properties

There are many different ways by which you can rent your properties. You can rent it residential rental (paying guests) or like an office or for storage. There are many more ways to rent your property like commercial or non-commercial ways.

Many people rent their properties for banks, gyms, coaching classes, shops, garage and there are many more ways to rent a property. The main thing to focus on is how can you make the most of your property.

In the book Rich Dad Poor Dad by Robert T. Kiyosaki, the author told us about how he buys properties in a higher price and then he rents it out to the people who came to live for a short amount of time (like tourists) and in that time, he takes a large amount of rent and in rest of the months he takes less money as rent and by doing this he gets back his money in almost three years and now he has that property and that money too by which he buys that property.

So by renting out your property, you can recover your money which you have invested to buy that property.

Some real-life examples

Let us take an example, I have a friend who used to study in Kota, Rajsthan for preparation for his entrance exams. So he once told to me that every house here is a rental property. Every house there is a hostel. Every one opened a hostel. The main source of income after the coaching classes is a hostel and residential rental.

He said in the hostel he currently staying have his owner and his family living on the 1st floor and he made hostel on the ground floor. The whole family manages the hostel, they used to make food for the students and many other things they do. So In Kota, they are earning passive income by converting their properties into hostels.

Hostel signboard

So people can make hostels in an area which have schools, coaching or other educational institution nearby.

I know a person who has a large property site. And now he earns more than a lakh per month. He made a building in that piece of land. The ground floor he rent it to a bank, an ATM, and some shops, on the first floor he rented it for some shops and on the upper two floors, he rented it to many families.

He used that piece of land for rent properties both commercially and non-commercially and now he is generating that amount that an engineer earns from working 9-5, and he is earning that income without working as he is not doing any physical or mental work and also he is financially stable. He rented his property both as a commercial rental as well as a residential rental.

Rental income vs Business income

Rental IncomeBusiness Income
You will get a fixed amount of money every month as rent (except for special conditions).You will get profit and the amount can vary month to month. In any month you can get a good amount of profit and in any month profit can be negligible.
This is the income generated by renting your property.This is the income that you generating from your business.
You will not get lost as a fixed amount of money is assured.You might get a loss in your business.
No one need a team to work under them whom you have to give a salary.In most cases, companies have a certain number of employees. Whom companies have to give salaries every month.

Rental income vs Earned income

Earned IncomeEarned Income
You will get a fixed amount of money every month as rent (except for special conditions).You will get a fixed amount of money every month as a salary (except for special conditions).
This is the income generated by renting your property.This income is generated by working for someone like the government or a company.
The money will be provided in the form of rent without doing any work.The money will be provided in the form of salary for the physical or mental labor you do for your job.
You will become a time and place independent you do not have to go to the office and work.You will have to go to the office or any other workplace to work.

Conclusion

Rental income is a very easy and reliable way of generating passive income. You have to put minimal effort to generate passive income by this. I hope you understand everything by means of this blog.

I told you about some of the real-life examples which I think became helpful for you. We discussed different ways and how you can make most of this.

FAQs

What are storage rentals?

Storage rentals are rentals in which we rent our properties for storage purposes. When anyone wants to save their product then he wants warehouses and you can also rent properties for storage as warehouses.

Will rental income affect your taxes?

Under the Indian Income Tax Act, income from the property is considered as taxable. You have to give tax on the income you earn from your commercial, residential or industrial rentals.

Want to read?Passive Income by Mutual Funds, Dividend Stocks, and Savings Accounts

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