Anyone that knows anything about business, wants to make passive income. Many folks would like to have a primary, or secondary source of passive income in real estate. I am one of those people. Currently, my passive income in real estate is around $500-$550 per month (including signing a lease agreement just this past Tuesday). Not much, huh? Well what could you do with an extra $500 per month? Today, I would like to present a high level overview of my plans for passive income in real estate. But first, let me define “passive” as I see it, for you.
There are lots of definitions out there, but to me, passive income is “hands off” or “almost hands off” income streams. The real estate investing that I do, coupled with property management, has great potential for current and future benefits. However, investing in real estate takes a lot of initial work, with some additional work down the road. Likewise property management requires a lot of startup effort, with a lot less in the future. I don’t believe there are too many highly lucrative, true blue, do nothing type income streams, unless you are planning to hire someone else to manage your businesses (BE CAREFUL!).
Bottom line, the income streams I am building should prove to be low maintenance in the future. So now, I want to give you a guide that I am using to create passive income in real estate:
- Finding and negotiate excellent buys on single, two, three, and four family homes. See my Real Estate Analysis Spreadsheet and Simple Guide to Real Estate Investment Property Evaluation for help in the most important part of real estate investing — BUYING RIGHT!
- Rehabbing the property(ies).
- Renting Out Your House
- Seller Financing Agreement
- Residential Lease Option
- Residential Lease Purchase
- Later down the road find, negotiate, buy, and develop land projects.
- Develop my Business Plan for Property Management on a part time basis (for now).
Now these all seem to be active streams of income, but I assure you that once you have a portfolio of properties that you own yourself or manage for others, the workload will decrease dramatically. I have a property that I manage in a neighboring town that I setup a few months ago, and have never heard from the renter a single time after the initial signing of the lease, I only collect a check!
I have already elaborated quite a bit on the first point above in the links provided, but check back here often (or better yet, sign up for my RSS feed), as I will be doing a series detailing the remainder of the points described above. Feel free to comment or ask questions below, and I will answer them as soon as possible.