Monday, November 12, 2012

Passive Income

As M & I look to the future and our 10, 15, & 20 year plans, we're considering how we can start to generate passive income in place of working full-time "career" jobs.

One option we're considering is creating a portfolio of investment properties. Money is currently cheap, we have stable jobs & outstanding credit, & could cash flow months without renters (assuming we sell our vacation property).

From the small amount of research I've done, I'm creating a series of steps/decisions to think about.

  1. Choose a market
  2. Determine the amount of investment
  3. Run various cash flow scenarios
  4. Select a property
  5. Decide if we want to use a property management company
  6. Rent property
I'm sure there's substantially more for us to think about, but we're somewhere between the 1st & 2nd steps right now. Our goal would be to have our initial investment (the down payment) paid off in 5 years, and then have the property be cash flow positive after that with some sort of base amount that's still TBD.

Do you own rental property, or have other ways to generate passive income? I'd love to hear more!
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5 comments:

  1. JenniferNovember 12, 2012 at 3:47 PM

    I have not started thinking about it quite yet with all our debt. We are just trying to get our retirement accounts full funded.

    However, if I were going to invest in passive income, it would be a combination of things. Traditionally stocks/bonds/etc with rental properties.

    Other than investing in a business as a silent partner, I am not sure of many of the other ways - my ignorance?

    ReplyDelete
  2. TaniaNovember 12, 2012 at 6:37 PM

    I would love to get into trading stocks as soon as I can get enough funds together. I think it could become a nice source of passive income, since I dont think I'll be getting into rental properties for at least another dozen years!

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  3. AnonymousNovember 13, 2012 at 6:07 AM

    I've been working on generating income from stocks (dividend portfolio) and a network marketing business. What I like about these two methods of passive income, is that we could live anywhere with wifi.
    My father has several rental properties and in his experience he much prefers commercial/retail/industrial real estate to residential (way too many nightmare tenants). Unfortunately renters often don't treat their properties very nice and the security deposit doesn't usually cover the damage. Lots of research needed, plus if you use a property management company, that eats away at your income. My advice is use a good realtor to help you find a good property. Over at www.freemoneyfinance.com he has been looking to start buying/renting and has already gotten burned once even before he bought a property.

    ReplyDelete
  4. Sonya AnnNovember 13, 2012 at 6:53 AM

    My dream is to generator an income from writing. Bahahaha, I am delusional!

    ReplyDelete
  5. Sonya AnnNovember 13, 2012 at 6:54 AM

    Generate not generator. I blame my pointer finger.

    ReplyDelete

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