![]() ![]() This income source could be from a spouse or even a hefty emergency fund, but it has to exist. ![]() I would venture to argue that all successful passive income ventures require a pre-existing stable primary income source. Obviously, the process becomes easier with practice, but the upfront work can be substantial.ĭoctors shouldn’t quit their day (and night) jobsįor busy professionals, this homework has to be done in your free time. For this endeavor to financially supplant your primary job as a physician, you’d better own another dozen of these units. Most successful investors in these venues clearly have a strong interest in learning the in’s and out’s of the business or a strong desire for money. Mathematically, this sounds like a winner, although the amount of background work invested into this cash-flow property is far from passive. That is a pretax cash-on-cash return of 15 percent ($15.000 on a $100,000 investment). And the biggest unknown is the amount of work that you have to put into developing a reliable passive income stream.Īfter mortgage interest and operational costs, you profit a handsome $15,000 per year. Even then, chance can still intervene for or against you - you can have deadbeat tenants find that the land on your property is spewing out toxins or hit the jackpot when a tycoon decides to offer you ten times the amount your property is worth. The point about passive income is that it only becomes a passive endeavor once the income stream has been established and stabilized. Even then, the founder of the swimming pool company had to put in the work initially. This is probably the closest that one could get to being passive income. The swimming pool maintenance company owner inherited his business from his father, who took roughly three decades to establish the income-generating behemoth that it is today. Dividends are paid out quarterly, and facilities are refinanced every five years resulting in big payouts to investors.Īll of these scenarios are real and result in passive income, but it is important to realize that there were undoubtedly unmeasured amounts of effort and time into developing these income streams. Participating in several syndicated investment ventures in commercial real estate.Even the rent checks are deposited electronically. Owning multiple rental units with property managers handling all of the tenants and daily operations.Income just gets deposited into your bank account automatically. Owning a swimming pool maintenance company with managers handling a full staff of employees.By having passive income, we can focus our most precious resource, time, to what is important to us. It connotes income hitting your bank account without any effort. The audience only sees the end result and makes whatever judgment they perceive. There is indeed an incredible amount of work behind the scenes to obtain the intended result. Professional swimmers dedicate years of training and a controlled caloric consumption without lapse. Success is even more difficult if you lack the talent to begin with! Only after two decades, some gray hairs, and a lot of mental and physical pain during my medical training did I better understand what Thomas Edison meant (maybe). A little later in life, I remember hearing the quip coined by Thomas Edison that “genius is 1 percent inspiration and 99 percent perspiration.” I naively assumed that talent combined with a bit of elbow grease would really go far in life. ![]() I had no clue how much work had to be invested to make talent look seamless. “Talent would make my life so easy,” so I thought. As a child, I remember watching superstar athletes like Wayne Gretzky glide so effortlessly on the ice and dreaming about how easy life would be to be blessed with innate talent. ![]()
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