[mtd1523]

Is there any other way to create passive income besides real estate? And if so, what other ways are there?

Thanks!

[Karen]

Anything that will generate a recurring income, whether you work or not, is considered passive. You can take a vacation and the money keeps coming in.

Real estate and owning a business are the most common, but there are several ways.

In order to generate passive income, you have to create something that can be duplicated by others. Generally, if you have to be the one to do the work it is not passive because you have to continue to do the work to make the income.

Examples:

If you own a hot dog stand, it is not passive. However, if you own several hot dog stands with other people working the additional stands, it is passive.

If you are a web site designer, it is not passive. However, if you own a company that employs a team of designers, it is passive.

The other way to have a passive income is where you do the work once, and the income keeps generating.

The most common method of this is real estate, you buy the property and collect the rent. Another one is writing a book, you write it once but make royalties on the sales.

I hope this helps.

Karen

[mtd1523]

Yes that does help, THANK YOU!

An additional question I have regarding passive income is this...

I have some credit, in fact, one of my credit lines just went up on one of my credit cards because I am such a good customer :-) but my question is, can I get a loan to buy real estate even with not much of a credit history?

Say I want to buy real estate (a house), and make a down payment of $5000, but I need an additional $25,000 on a loan to cover the cost of the house. Is it possible with a little credit history to get a loan for that much?

I can say that I have probably had a credit history for about 6 or so years, always good.

[Karen]

Obtaining a loan is usually possible, if your credit is good. The house becomes the collateral for the loan so the bank feels like they are covered.

Keep in mind, buying real estate for investment is an art. In order to create cashflow alot of factors must be met, or you run the risk of having negative cashflow.

Karen


<rant> real estate also turns a beautiful saturday, where one should be on the water, into a boring day of fixing shower walls and shampooing carpets.
</rant>

[mtd1523]

I don't plan on buying real estate any time soon. I have read all 5 books from the Robert Kiyosaki series and it is a little inspiration. Also, in Real Estate Riches, the guy talks about the 100-10-1 rule, I think that is it...it's been awhile. But if I would get into real estate buying as an investment, I would definitely use that rule or at least take my time before buying anything.



One thing I always thought of when thinking about real estate is that, couldn't I just tell the renters that they should think of this "apartment" as their own home, meaning, cutting the grass, fixing the appliances...etc.

My friend's parents own an apartment and they are losing money on it because 1.) my town's economy is slowly declining, and 2.) nobody wants to buy it from them when they try selling it. Therefore, they are stuck with it. I hear about my friend's dad always having to go down to the apartment to fix something and it seems like such a big hassle to them.

Additionally, my uncle just bought my grandma a house and she is paying rent to him. He had it fixed up now and it is a beautiful house. But he doesn't have to do a thing to it. He lives in Maryland and only comes to where I live a couple times a year. Now, I know that this is a different situation because it is family and he bought the house for her, but isn't it possible that I just tell people to think of it as their own home?

[Karen]

If you have a condo or an apartment, then the grass usually doesn't even apply.

But with a house, yes sir! The tenant cuts the grass, shovels the driveway and keeps the yard clean.

As for repairs, the tenant is not responsible for fixing anything. Sometimes, something simple the tenant will go ahead and fix and then give the bill to the landlord.

Karen

[mtd1523]

Couldn't that apply to bigger things as well? The tenant goes ahead and fixes it as if it was them living in their house and then just give the landlord the bill. That would probably save a lot of hassle of the landlord having to run around so much trying to fix everything.

[Karen]

Yes it could, but it usually won't. Something like getting the fridge looked at because the freezer isn't working, sure a tenant could go ahead and get someone to look at it, but they usually won't.

Most tenanats won't even by a new sink plug becuase 'the landlord is suppose to'. Bigger things a tenant usually can not afford to do, fix the roof for example, since it costs to much.

Karen

[harrymcwealth]

When you decide to go into real estate you must do careful calculations, that's what makes it an "art" as Karen says.
You have to take into account everything (for costs), maintenance, management, the mortgage, tenant occupancy, utilities, insurance etc.
Also you should go outside you realm for reading, Robert Kiyosaki's books are just a synopsis on business and real estate, and all 5 of those books are clones of each other.
To make money on a place you need three things:
1. Good Tenants (This is all part of the process)
2. A Good Mortgage
3. Low Price on the Building
All these things coupled together make for success (usually).
You say that the house prices in your area are going down.
Well then it might be a good opportunity to buy!
Find those bargains!
In response to your bad tenant ordeal, my friend, you have to write a good contract.
If you want the tenants to take responsibility it has to be in writing.
Also, a fully furnished house (as you say with fridge and such) is not a good idea.
If the tenant isn't willing to move their own furniture in they're probably a bad tenant.
That is they will treat the place like it's not their own.
Having their own furniture, fridge, washer, etc shows their commitement.

ALSO remember it's at the price you buy where you make your money.
You should look for a minimum 40-50% (perhaps 30%, but then you negotiate) discount.
Watch for those motivated seller.
E.g. they're moving, they're retiring, there was a family death and so on.

For example houses in my area sell for $300,000.
If I get a house at $150,000 or $160,000 then this is a good deal.
Oh btw I have a careleton sheets (like kiyosaki) program if you're really interested in real estate.
I can burn you a copy (i put it in mp3 format).
Just contact me, harry1984@hotmail.com
Give me your address and whatever.
I'll send it for free...if i have any money left over this week.
I also have some books if you're interested.

[Epik]

Hey Harry, i'm interested in the whole real estate area as well. Along with some e-commerce I plan to do this year, Real Estate is definitely an area i'd like to learn more about.

I turned 18 recently, and am now a business student at ASU. But if you are willing to share some information, i'm all ears.

Real Estate in Arizona right now seems to be doing pretty well, and i've got solid credit. Thanks in advance.