As the Internet has grown and matured, even though it’s still a young sapling, a few characteristics have made themselves known to those with an entrepreneurial bent. One of these buzzwords, or buzzphrase as the case may be, is passive income. The Internet is seen as a treasure trove of passive income possibilities to marketers. We agree, the Internet was tailor made for passive income but, as income property investors, we have an even better idea about how generate it.
Too many make the mistake of viewing real estate as a one dimensional asset. You buy it, wait for it to appreciate, then sell it for a profit. That’s nice but completely misses the logic of investing in real estate because it is a multi-dimensional asset. Pinning all your profit hopes on simple appreciation is what investors do with stocks, bonds, and mutual funds, and is precisely why they are such sub-standard investments.
We can list three solid ways to profit off real estate just off the tops of our heads. Appreciation? Nice enough but nothing special. It is passive, meaning you don’t have to do anything for it to occur. Next? How about tax advantages? Too many people underestimate the power of real estate when it comes to saving on taxes. Folks, this is a Big Deal and you should recognize it as such. This is THE most favored asset class, bar none, when it comes to the IRS. Ever heard of a 1031 Exchange? This alone is worth the cost of admission.
Last but not least we come to the bottom line. Can you rent out your stocks, bonds or mutual funds? Err, no, have you guys at Bonus Commissions been smoking the funny grass? Renting out your investment, as is done with great regularity in real estate, is a passive way to exponentially increase your income. Think of that income from a tenant as getting a free mortgage payment each month. By the time it’s paid off, 20 or 30 years down the road, it’s like someone literally gave you the property.
It doesn’t get much better than that. When it comes to passive income – game, set, and match – real estate wins.
The Bonus Comissions Team
Flickr / pheezy