Learn how to create extra income, with these tips for making money with passive income. Here, a financial expert and author describes seven steps to creating extra income without doing a lot of extra work. Brandon Wilkins is the author of Getting Rich is Simple…But It Ain’t Easy.
“My favorite form of passive income would have to be rental real estate,” says Wilkins. “Depending on the number of units you have, the cash flow is higher. And it is consistent (monthly). Once the property is occupied, you can outsource any maintenance or repairs that need to be done. You can even outsource collection of revenue (through a property management company), though I don’t recommend this right away.”
I don’t own rental real estate property — but I love passive income! To learn more about making money with little effort, read Making $40,000 Per Month In Extra Income: A Step-By-Step Guide In Building Wealth Through Various Income Streams by Marc Gaudet.
And, read on for Wilkins’ steps for creating passive income…
How to Create Extra Income – Making Money With Passive Earnings
1. Do your financial research and crunch your numbers. Make sure your projected revenue numbers will be enough to cover overhead and expenses, even in an economic downturn. Wilkins describes how he bought a car wash just as the economy plummeted: “The sales numbers I needed in order to meet expenses and give me my desired cash flow started decreasing, and became not profitable. I got rid of it – but I’d buy a self-serve car wash again in a different economy.”
2. Always ask, “How can this make me money even if I’m not doing anything?” Creating passive income is easier when you come from that perspective. “How will this operate without me?” is the question that helps you brainstorm ideas that can create extra income. If you’re thinking about investing in real estate as a form of passive income — like Wilkins does — read Tips for Investing in Real Estate.
3. Research the most profitable types of passive income before you invest. Small vending machines – the ones that dispense a handful of candy for a quarter – are one of the most profitable types of passive income. “You can pick up one of these machines for around $50 and stock it for about $10,” says Wilkins. “All you need is a location with foot traffic. People don’t think twice about spending a quarter on some candy or nuts.” He says that this these vending machines work even better in locations where there are parents with children, such as a doctor’s or dentist’s office, toy store, etc.
4. Remember that most types of passive income streams require some effort. If you own a vending machine, you’ll have to service it once every two weeks – or maybe more, if it’s doing high volume. “Vending machines are definitely a passive source of income, because they make money while requiring minimal effort,” says Wilkins.
5. Learn to put a true “value” on your time. If someone can do something quicker and cheaper than what it would cost you in time, then it’s better to pay to get it done. For instance, if you buy a vending machine but don’t have time to maintain it, then it’s more profitable to hire someone to do the job.
6. Recognize that earnings depend on the type of passive income stream you invest in. Financial income varies widely, depending on the type of income stream and your requirements. “My rule of thumb is that low investment opportunities should profitable in six months to a year,” says Wilkins. “For higher investment opportunities, profitability should come within two to four years.”
7. Consider a “passive income partnership.” “If you don’t have money to get started but are willing to put in the sweat equity, find a partner,” Wilkins says. “He or she can invest the money to buy the machine(s) and inventory, and you can service it.” You can split the profits until you buy the machine. Then, after you own it, you can put the money you earn into another vending machine. If you’re not interested in a partnership with a person, read Tips for Borrowing Money to Invest.
Do you have thoughts about creating passive income streams? Please comment below!
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Brandon Wilkins is the co-founder of Financial Freedom Builders LLC, and is available for coaching, workshops and seminars designed to help you take control of your finances. To learn more about his book, click on Getting Rich is Simple…But It Ain’t Easy (pictured).