Real Estate Investing

A recent reader question started us down the road of passive income. One of the most popular types of passive income is the latest and greatest trend of Internet advertising. Weblogs, or “blogs,” are a goldmine for this type of revenue. Blogs are ever increasing in popularity and are updated frequently with fresh content, so readers check back often. Advertisers pay big money to have their products or companies seen on those blogs.

Google Adsense is one of the most popular Internet ad networks for web publishers. Many people take ad revenues and pay someone to write the blog content articles. That way, the blog stays updated and the blog owner keeps the net ad revenue as profit. Although ad revenues are considered “passive income,” maintaining a blog is far from passive work. Even if a person is not writing the content for the blog, they must market the blog to increase visibility, readership and advertising revenues.

Real estate blogs are tremendously popular, particularly when they cater to specific housing markets. For instance, there are more than a dozen blogs catering specifically to Las Vegas real estate. Who is backing these blogs? Particularly with local blogs, catering to specific markets, it is primarily realtors and property investors.

Income from being a realtor or flipping property is not considered passive, but both can be supplemented by passive income off advertising revenues from a real estate blog that may be managed simultaneously. This type of passive income could also supplement passive income from being a landlord. A person who owns enough rental property and manages a real estate blog or two could generate enough passive income to be self-sustaining. But this is a prime example where the term “passive income” could be misleading, because as author Lisa Moren Bromma said, rental management is hard work. Of course, just as with blog management, the task of rental management can be hired out.

Passive income can basically be broken down into two types of income - residual and leveraged income. Residual income involves a one-time effort that brings in revenue repeatedly over a period of time, without any additional work required. Leveraged income is when one person profits from the actions of another.

Examples of Residual Income

Sales rep who earns commission each year when customers renew their subscription to a product or service.

Business or franchise (or property or blog) owner who hires a manager to run operations.

Artist royalties from the use of a song or other artistic work.

Examples of Leveraged Income

E-book authors who sell their books through affiliates on the Internet. No interviews, no promotional tours, just sales coordinated by someone else.

General contractors who profit from the work of sub-contractors. This can still be quite hands-on work, but site supervisors are usually hired to handle mundane, everyday management tasks.

Business owners selling franchises in other areas. This is one of the most profitable forms of passive income, along with being a general contractor, being a landlord and earning artistic royalties (depending on the popularity of the song).

The concept of passive income has been more heartily embraced by recent generations. It is a different time with rapidly changing media. Income options have become much more diverse as a result. The traditional view of wealth involved working hard, putting your nose to the grindstone, pulling yourself up by your bootstraps and any other cliche one can think of, today’s generation favors working less and earning more. It makes sense, and a little innovation can create ways to apply passive income techniques to many different fields in groundbreaking ways.