5 Smart Assets to Generate Income (That Aren’t Traditional Rentals)

When most people think about investing for income, they picture owning rental properties or buying dividend stocks. And while those are common choices, they’re not the only ones.

The truth is, there are many different assets to generate income, and some are far more passive, flexible, and beginner-friendly than you might think.

If you’re looking to build cash flow or diversify your portfolio, here are five options to consider—plus a closer look at one that’s becoming increasingly popular with professionals looking for true passive income.

Performing Notes (Mortgage Notes)

Performing notes are one of the most powerful assets available to generate income, especially for investors who don’t want to manage property.

Here’s how it works:

When someone buys a house, they usually get a mortgage. The bank lends them the money, and they pay back the loan with interest over time.

Note investors step in and buy that mortgage from the original lender. From that point forward, the borrower keeps making payments—but now the payments go to you, the note investor.

You’re essentially becoming the bank.

Let’s look at a simple example:

You purchase a performing note for $70,000. The borrower owes $100,000 and pays $700 a month. Because you bought the note at a discount, your yield is higher than the interest rate on the loan. Over time, you collect steady monthly income—and your investment is secured by the property itself. If the borrower stops paying, you have legal rights to the property through foreclosure.

This strategy provides predictable monthly income, and you never have to fix a leaky faucet or chase down a tenant.

Why it’s a smart income-generating asset:

• You receive monthly payments like a landlord—but without the responsibilities.

• Entry costs can be lower than buying physical real estate.

• The investment is backed by hard assets (the real estate itself).

• There are multiple exit strategies (you can sell the note, modify terms, or foreclose if needed).

Digital Assets

In today’s world, digital assets have become one of the most scalable and versatile ways to earn income.

This includes things like:

• Blogs or niche websites

• Email newsletters

• E-books or online courses

• YouTube channels

• Affiliate websites

The idea is to create something once and generate revenue from it over time. For example, a blog post that ranks well on Google can bring in affiliate commissions or ad revenue every single month with no additional effort.

Unlike physical assets, digital assets often require time and skill more than large capital investment, making them accessible to many investors. Once built, they can be outsourced and managed with minimal involvement.

Real Estate Investment Trusts (REITs)

If you want exposure to real estate without buying or managing a property, REITs are worth exploring.

REITs are companies that own or finance income-producing real estate across a range of sectors—residential, commercial, industrial, even healthcare.

Investors buy shares of the REIT, and in return, they receive a portion of the income generated from those properties—typically in the form of regular dividends.

REITs are publicly traded, so they’re liquid and easy to buy and sell through a standard brokerage account. And because they’re required by law to distribute at least 90% of their taxable income to shareholders, they’re often considered a strong income play.

It’s not uncommon for REITs to yield 4%–8% or more annually, depending on the type.

Dividend Stocks

Dividend stocks are shares of companies that distribute part of their profits to shareholders on a recurring basis, often quarterly.

These are usually established, stable companies with a consistent track record—think consumer goods, utilities, or big-name brands.

The appeal? You earn income simply by owning the stock, regardless of whether the stock price rises or falls in the short term. Many long-term investors use dividend income as a supplement to retirement, and some even live entirely off dividends.

It’s also common to reinvest dividends automatically to buy more shares, compounding your income potential over time.

Things to look for:

• A healthy dividend yield (usually 2%–5% is a good balance)

• A solid history of paying and increasing dividends

• A sustainable payout ratio (how much of earnings the company pays out)

Private Lending

Private lending is another asset that puts you in the role of the lender instead of the borrower or landlord.

You provide capital to another investor or small business, often secured by real estate or another asset, and earn interest in return.

As the lender, you negotiate the terms: the loan amount, interest rate, collateral, and repayment schedule.

This can be an effective way to generate predictable income, especially if you’re working with experienced borrowers or investing in secured deals. It also gives you more control over your risk level, as you can choose which deals to fund.

Some investors lend through platforms that connect lenders and borrowers, while others lend within their personal network or through a self-directed IRA.

Why Income-Generating Assets Matter

Most people spend decades working for their income.

But assets that generate income allow you to build wealth without constantly trading time for money. Whether your goal is early retirement, creating a second income stream, or reducing reliance on a job, these assets can help you get there.

Each asset has pros and cons, but the key is this: Income doesn’t have to come from ownership alone.

Note investing, in particular, offers a unique combination of passive income, security, and scalability—without the hassle of managing property. If you want to learn more about note investing we are going to make it easy!

Below, there are 4 ways you can start learning more about note investing… which will you choose?