Archive for Other Passive Income Ideas
5 Reasons Why Rental Properties are the Best Form of Passive Income
I, like many people, own stocks, bonds, mutual funds, IRA accounts, foreign currencies and a couple forms of passive income. Wow that sentence had a lot of commas! However, if I was to draw you a pie chart depicting how much of my financial portfolio is divided up between all of the above mentioned assets and real estate, we would be looking at approximately 90% real estate holdings and the other 10% divided among everything else. Perhaps the only reason why I don’t have 100% of all my wealth in real estate is because I was “told” not to. I personally don’t see a problem with throwing all of your eggs in one basket so to speak, but with all the talk of “playing it safe” over the course of my financial education, I reluctantly decided to diversify. And thus I now own the typical mutual fund, a separate Roth IRA, a few hand picked stocks, 3 Million Iraqi dinars (which aren’t worth very much – I bought them while I was in Iraq, trying to speculate on a strong Iraqi economy rebound…maybe someday), and some loan notes I made to people in the past (which I now realize that I don’t care to be a lender anymore). There are several reasons why I love real estate over all the other assets.
1st Reason.
My money is (relatively) safe, tied up in the equity value of the home. I don’t live in a major city where home prices have dropped like a rock nor do I buy real estate that is priced for the upper middle to upper class citizens in my area. I tend to stick with properties in the lower middle to lower class areas of town. Does this make me a slumlord? No, I don’t think so. I believe a slumlord is someone who treats his tenants badly and neglects to do proper repairs on the home when needed. By owning the lower end to the bottom of the real estate market, there’s really nowhere else for the price of the property to go, but up. At least, as far as I have experienced. My home values have been generally stable over the last couple of years and I have had several offers to purchase them from other landlords in town.
2nd Reason.
My properties not only generate a stable source of monthly income through rent, but also might appreciate in value over the years. Several of my properties tax values have increased. That doesn’t mean they will sell for higher than I paid for them but obviously the county tax man believes they are worth more today than when I bought them. I view this as a double reason to love rental properties. You get the added benefit of watching your net worth rise, like owning an IRA, without having to make monthly contributions to it.
3rd Reason.
Someone else builds your equity in the property. If you did your math correctly (like i suggested in this article http://www.landlordsanonymous.com/2009/10/invest-in-the-right-rental-property/), then you should have someone paying the bank off for you and allowing enough for you to realize a nice little profit each month. Not only will the home’s net worth increase over time (hopefully), but your property equity will increase so when you go to sell the property one day, the banker won’t get to keep as much of the profit if you still owe a mortgage on home.
4th Reason.
Tax benefits! Holy cow. There are so many tax benefits when it comes to dealing with real estate. Gas for your own personal vehicle (as long as you use it for business purposes), repairs and improvements on the property (which increase value), and mortgage interest deductions to name a few. I will post another article on the many different tax benefits to owning rental properties.
5th Reason.
You have a real, solid, honest to God piece of property you can drive up to and place your hands on if you feel like it. I don’t know about you, but I feel sort of helpless owning a mutual fund. I have no say in anything except to buy, sell, or hold. In the field of rental properties, if I have a problem with a tenant who is not holding up to his end of the bargain, I can evict him/her and find a better one. If I want to inspect the property to see how it is being treated, I have the right to. Can you approach your mutual fund manager and ask to inspect what he’s been doing for the last year with your money? Sure you can view specialized reports, but can you get your specific questions answered and have your input taken seriously? I’m not a control freak, but I like knowing that I do have some sort of control being in the rental property business.
These are just 5 quick reasons why I love holding rental property to increase net worth. It’s definitely one of the best “vehicles” someone could use to get to where they want to be in life. Please leave a comment and let me know what you think!
Writing Articles for eHow and other commission friendly websites
My wife and I started writing articles for the website www.ehow.comback in September 2009. We are thrilled so far with the results we’ve seen. eHow is basically a “how to” site that provides guides and instructions for just about everything under the sun. I read about this website over a year ago and learned that the writers receive compensation for the revenue they produce for the site because the site shares it’s profits with it’s contributors. I made a huge mistake however, when I signed up to start writing for them and ….well…didn’t!!
If I had at least wrote one article…one measly 300 word article, I would have changed my hobby interests immediately. No I wouldn’t have walked away from real estate investing by no means but I would have started writing for this website a whole lot sooner. This website is definitely legitimate and pays on time!
By chance, I happened to stumble upon the eHow website again almost a year later to the day. I decided to finally give it a shot and wrote an article. It took all of 15 minutes and I published it. A few days later I revisited the site and noticed I had made a small commission on my article. You do not make anything for just writing articles and publishing them but you do make money if someone comes across your article and clicks on the advertisements that are planted all throughout your article. Obviously, somebody had read my article because I had over 25 views and a few cents deposited into my eHow account.
This got me excited and I researched about the potential this site has and was floored. There are folks who have thousands of articles and are making thousands of dollars every month off of their articles through eHow. That’s CRAZY!! This is passive income at it’s finest people. Imagine having a thousand articles sitting on eHow with your name on them and every month you are making a thousand dollars for doing nothing at all. You write the article once it pays you for the rest of your life!
I started contacting various eHow writers through the forum this site has and asking them if they would mind giving me some details about the earnings they have experienced and most writers were eager to respond. It seems that the average you can expect on a typical eHowarticle is around $1 per month. That might not sound like a big deal. I mean to write a decent article you have to devote at least 15 minutes to an hour at the most. Who wants to be paid a buck for that amount of time right? Well think about the long haul. The article will pay you roughly $1 every month for the rest of your life. Over the course of the first year you have made $12 and over the course of 5 years it’s made you $60! Can you get excited over earning $60 for 15 minutes to an hour?!? What about 10, 20, 30 years…that’s $120, $240, and $360 dollars respectively! Wow! That little article will work for you around the clock, night and day to keep bringing home the bacon, meanwhile you’ve actually forgotten how to do exactly what you wrote about doing because it was so long ago.
With this new insight, Heather and I jumped in head first. We haven’t wrote many articles, but so far to date we have wrote 52 articles on eHow (took us a little over a month – and yes we are somewhat lazy and hard to motivate at times). I’ve heard of folks that single-handedly write 150+ articles a month and that’s by themselves! Heather and I tag team one account and we are falling behind the power writers, but that’s ok. We just received our first eHow payment today for the sum of $54.02! Not bad. If we stopped writing today and never visited the website again, our eHow account will probably pay us anywhere from $50-60 a month from now on through our Paypal account. That’s $600 a year folks. Our goal is to continue writing and try to accomplish at least 1-2 articles a day. That’s reasonable and hopefully our laziness won’t get the best of us. As long as eHow keeps sending us the checks I don’t see how we could stop. I can see these checks growing month after month and it’s very exciting!