.* Best For: Busy professionals or new investors who want steady passive income and a solid foundation.* Where: Midwest and Southeast markets like Missouri, Alabama, Tennessee, or Indiana have great turnkey opportunities with strong rent-to-price ratios and landlord-friendly laws.2.

People are always looking for ways to generate passive income, but it's often coming from those just starting out, with no experience, and with limited capital.

You could 1031 into something more passive like a DST.

That means real estate rentals aren't "per se" passive.

Unlike passive rental income, the income from an active trade or business is subject to self employment tax is nasty.

While real estate is technically the largest asset for many, especially homeowners, its value is often more passive and abstract unless it's actively leveraged.For the average homeowner, that equity just sits there—not generating cash flow, not being reinvested, and in many cases, not even fully understood.

If you can manage to have roughly the same amount of passive income, but have significantly more assets under management, it will significantly increase your long-term wealth! 

Are they as passive as I have heard about?

If you can't find properties you would like to live in affordably to house hack, I would recommend out-of-state investing with a trusted investor friendly Realtor who has a strong team, including a local property manager, that can keep your tenants happy and increase your ROI while keeping your investments as passive as possible.

@Eric Amundson, You can't do a 1031 exchange into non-real estate passive investments because it has to be investment real estate for investment real estate.However, there are syndications that do qualify for 1031 treatment because of how they are structured, such as UPREITS (Real estate investment trust), or DSTs (Delaware statutory trust).