Passive Income

**rogercbryan** · 06-01-2009 03:58 PM

I may have been a bit harsh on some posters who were talking about passive income. While I'm still 100% confident that the type of zero work passive income that most on this site are looking for does not exist I do have to take a step back and admit that I was not correct when I said there is absolutely no such thing as passive income.

I had a similar conversation with some buddies at the bar this weekend (from that I can remember) and someone made an excellent point. If you were to take $1000 and buy a site that is making $100 a month on affiliate sales, it is already SEO'd and is positioned in a niche market then you as the new owner would own a site that creates passive income with out doing any work. You would have to take into account that you would need the site to do so for at least 11 months to have actual 'profit' on your investment. You would also have to consider that no other site/person would create a competing site that would knock you out of your niche.

So in this case passive income does exist...

Where I still fail to see some peoples point of view is where they expect to take someones idea... develop a site... and then make money with no marketing and/or optimization. In my opinion you would need to spend at least 1 hour a month fine tuning your adwords campaign to keep a site profitable. So at 1 hour per month you are no longer passively creating income.

I'm a firm believer that it takes hard work and lots of it to make real money ($1M+ a year in sales). I can't argue that some of you have sites that make $20 a month and that you do little to no work to make that money... but hell thats NOT MONEY! That's 2 beers at the bar!!

I would like to know everyones opinion on passive income from sites or even BnM Businesses. Your experiences would also be helpful to help educate other YE's and myself... I'm all ears and hoping for a good conversation!

**Neustance** · 06-01-2009 04:23 PM

Seeing all these affiliate marketing, and passive income approaches to business is simply a waste of time in my perspective. I believe people need to think big, and create real business that you actually have to work and deal with people.

There's is simply no way to make an acceptable income by doing nothing, its actually a bit disturbing that's the approach of a huge amount of "entrepreneurs." Maybe its a start for young people, but money simply doesn't pop out from doing nothing.

Look for niches, find and emerging industry you like and plan. Plan on building long-term and stable business, create implementation and marketing strategies. Take the risks, work and you'll see results.

The good thing I see about "young" entrepreneurs is that we have all the time we need. Start from nothing but in 2-5 years, if you find a good industry chances are you'll be successful. Patience and dedication are the keys to success in my perspective, nothing else, plenty will say luck takes a big part, but does it really? If you commit on what you do, and commit on achieving goals I can assure you, itll pay off.

**JohnGalt** · 06-01-2009 05:18 PM

I don't think that passive income means "make money by doing no work" like you are implying it does. Passive income is making income while not working. You might have to work 1 hour a month on your site, 1 hour a week, 1 hour a day, but as long as the website is bringing in money while you are not working on it, you are making passive income.

If you only make money from your job while you are at work and on the clock then you are not making passive income.

If you make money while you are sleeping, from a website that you worked on for 2 hours earlier that day, then you are making passive income.

People who pursue passive income are not looking for money for nothing they are simply looking to build revenue streams that only require occasional upkeep. I could spend 10 hours a day working on my websites but I will work on multiple websites and/or businesses all of which will then continue running themselves while I move on and work on one of the other projects.

Best of luck

**rogercbryan** · 06-01-2009 05:28 PM

Originally Posted by JohnGalt

I don't think that passive income means "make money by doing no work" like you are implying it does. Passive income is making income while not working. You might have to work 1 hour a month on your site, 1 hour a week, 1 hour a day, but as long as the website is bringing in money while you are not working on it, you are making passive income.

If you only make money from your job while you are at work and on the clock then you are not making passive income.

If you make money while you are sleeping, from a website that you worked on for 2 hours earlier that day, then you are making passive income.

People who pursue passive income are not looking for money for nothing they are simply looking to build revenue streams that only require occasional upkeep. I could spend 10 hours a day working on my websites but I will work on multiple websites and/or businesses all of which will then continue running themselves while I move on and work on one of the other projects.

Best of luck

What in the hell are you saying? Each sentence contradicts the one before.... I have no clue...

**JohnGalt** · 06-01-2009 06:09 PM

Originally Posted by rogercbryan

What in the hell are you saying? Each sentence contradicts the one before.... I have no clue...

Well then I suggest you read a book on passive income before starting anymore arguments with people on here about whether or not it exists since you don't understand the concept.

Best of luck

**armenh** · 06-01-2009 07:06 PM

Passive income simply means to be able to bring in revenue or income while you are sleeping or concerning yourself with another business/job. The best example would be investment properties. A landlord simply collects the monthly payments from his or her tenants, this might take a couple hours away from you a month to sort things out but basically it is not a full time job and it is bringing you passive income.

Some people might say passive income could also coincide with supplmental income. This purely depends on ones economic situation. Passive income is a term usually coined with Brick and Mortar businesses/properties and supplmental is more along the lines of internet businesses(speaking for the general population). I find it foolish to call a website one owns a form of passive income. It has no real tangible value and it could disappear or lose all its value overnight. On the other hand the return on internet businesses are much greater in a short period of time.

**nonrate** · 06-01-2009 07:34 PM

Roger, I agree that building something and expecting people to come with out doing anything to promote is foolish and will not work well. When I made my post about passive income the other week, I was not looking for sites that would have no promotion attached to it since you are correct, in just about every case, your results would be poor to none. I was looking for an idea that could be built and promotion-worthy, that is, have a good conversion rate for the work you do to bring people in.

However, I do like to think outside the box, meaning, not limiting my imagination to things that have already been done. Because my skills lie a lot in automation of web systems, I wanted to see if any one had an idea that could take advantage of that to minimize or reduce the effort involved with promoting the site but still yield good results. I could theoretically devise an automated system to market a site for passive income. Of course, discovering that idea could take as long as it takes to actually market a site normally! But, I do believe in possibilities, and my nature is one of the innovator, to discover new ways of doing things.

If I had the time (meaning money), I would devote more time to finding new methods to make marketing easier with automation, replication, etc.

But I do have to agree there is no silver bullet website that you can just install, run, and collect money very effectively.

Yet!

**Deal_Maker** · 06-01-2009 07:36 PM

Originally Posted by armenh

I find it foolish to call a website one owns a form of passive income. It has no real tangible value and it could disappear or lose all its value overnight.

Now I'm not a website guy, but if you owned a website and it was generating cash every month with only a few hours of work, would that not be passive income? Also, in reference to the second quoted sentence above, I think you're confusing tangible value with enterprise value and since when does enterprise value determine whether a stream of income is passive or active? I don't see how the two relate.

If you have two assets both worth $10M and asset 1 is throwing off $100k per year and asset 2 is throwing off $1M per year I don't see how the value of the asset would determine whether the cash flow was passive or active. It wouldn't, but that's what you seemed to imply in your statement.

**nonrate** · 06-01-2009 07:49 PM

Originally Posted by rogercbryan

What in the hell are you saying? Each sentence contradicts the one before.... I have no clue...

I completely understand his post. His analogy of working on the clock is a great one, you are only earning income during the time you are exerting effort, in service to your employer. With passive income, you are exerting your efforts in service to yourself and those efforts may (or may not) continue to earn you income, even after you stop them.

When I was once working 9-5 I was making passive income. This is because I used to hold a pager. I would get paid $150 a week, on top of my salary, to hold the pager, whether it went off or not. If the pager never went off, I earned passive income --I was not exerting any effort in service to my employer while that pager remained silent, yet earned income.

Some other methods of passive income:

- Vending machines
- Online software sales
- Your 401k/stock market investing (talk about making money from nothing)
- Jukebox's and other entertainment machines (arcade machines)
- Books (Authors earn passive income)
- Music (Musicians earn passive income, albeit a small amount)

Does this make more sense?

**bananaman** · 06-01-2009 07:59 PM

Passive income exists, but effort/money must be spent at the start.

I have a website that I haven't worked on in 3 months. Last month it earned $122. In good times it was earning $200+/month.

However, I did have to do alot of work at the beginning. All up, in total, I probably spent 3 months working on it to get it to this stage, where it is earning money on autopilot.

A single stream of passive income will probably not be enough for anyone to live off, but multiple different streams of passive income is hard to come by.

**rpermana** · 06-01-2009 09:58 PM

hi bananaman..can you link the website to me ?

**rogercbryan** · 06-02-2009 08:03 AM

Originally Posted by JohnGalt

Well then I suggest you read a book on passive income before starting anymore arguments with people on here about whether or not it exists since you don't understand the concept.

Best of luck

I'll do that... would you like me to send you a book on contradictions? I can maybe include a dictionary and a thesaurus... Ewww wait and maybe a few on governmental politics.. you would find lots of contradictions there..

**rogercbryan** · 06-02-2009 08:09 AM

Originally Posted by bananaman

Passive income exists, but effort/money must be spent at the start.

I have a website that I haven't worked on in 3 months. Last month it earned $122. In good times it was earning $200+/month.

However, I did have to do alot of work at the beginning. All up, in total, I probably spent 3 months working on it to get it to this stage, where it is earning money on autopilot.

A single stream of passive income will probably not be enough for anyone to live off, but multiple different streams of passive income is hard to come by.

This is an excellent example of why I made this post. There is a line here where you put in the work.. then the site went on autopilot and you continued to make money. For the last three months you did make passive income.. (good work by the way).

I do have to note the diminishing returns. This is what gets me... if you have not stopped working on the site would it have gone from $200pm to $500pm? Why did you stop working on it? Did you make more sites doing the same process? Could you have created 10 sites each making $200pm?

I'm asking these questions because I'm genuinely interested. I must have a different point of view. To me when you stopped working on the site (to make it passive income) you did not make a good decision... the correct decision (from a purely business point of view) would have been to continue growing it to create higher monthly returns or to sell it. I am impressed that you were making $200pm... I have yet to get a site that did that continually. With that being said I have created 2 multi million dollar BnM businesses that drive online sales.

Hmmmmm.... good post

**rogercbryan** · 06-02-2009 08:17 AM

Originally Posted by nonrate

I completely understand his post. His analogy of working on the clock is a great one, you are only earning income during the time you are exerting effort, in service to your employer. With passive income, you are exerting your efforts in service to yourself and those efforts may (or may not) continue to earn you income, even after you stop them.

When I was once working 9-5 I was making passive income. This is because I used to hold a pager. I would get paid $150 a week, on top of my salary, to hold the pager, whether it went off or not. If the pager never went off, I earned passive income --I was not exerting any effort in service to my employer while that pager remained silent, yet earned income.

NOT PASSIVE AT ALL... you were being paid for the work you would perform if the pager went off. Way off base here...

Some other methods of passive income:

Vending machines

Wrong - you have to service and stock the machines daily to weekly

- Online software sales

This may be close... depending on if you do not work on your site and you use only drop shipping

- Your 401k/stock market investing (talk about making money from nothing)

If you think investing (successfully) is done passively then you obviously don't invest.

- Jukebox's and other entertainment machines (arcade machines)

Again you have to deliver, service, collect money... I would give this a semi-passive

- Books (Authors earn passive income)

You don't seem to understand this industry either... 99% of authors are paid one time for the act of writing the book.. then the bookstores buy the book from the publisher... then the bookstores make the ongoing money... not passive at all

- Music (Musicians earn passive income, albeit a small amount)

I guess if you owned the Beetles song list then yes you would have substantial passive (I think residual would better define it though) income. All other musicians spend there entire life (while working) promoting their music so it is not passive at all.

Does this make more sense?[/QUOTE]

You are 100% off base... this has nothing to do with passive income... There is no correlation between working for an employer and working for yourself in passive income definitions.

**rogercbryan** · 06-02-2009 08:19 AM

Originally Posted by Deal_Maker

Now I'm not a website guy, but if you owned a website and it was generating cash every month with only a few hours of work, would that not be passive income? Also, in reference to the second quoted sentence above, I think you're confusing tangible value with enterprise value and since when does enterprise value determine whether a stream of income is passive or active? I don't see how the two relate.

If you have two assets both worth $10M and asset 1 is throwing off $100k per year and asset 2 is throwing off $1M per year I don't see how the value of the asset would determine whether the cash flow was passive or active. It wouldn't, but that's what you seemed to imply in your statement.

Excellent post... intelligent.. definitive... and correct