Residual vs Passive Income

Residual vs Passive Income

Having rental properties provides monthly cashflow or passive income. The rent from tenants covers the expenses and what is left over is your passive income. The problem is there is nothing passive about having rental properties. You always have to deal with vacancies, unexpected expenses, and tenant issues. Even though there is a management company taking care of the properties, you still need to keep a close eye and be actively over seeing everything. If you leave it up to someone else your expenses may be much greater than the income and that will hurt your business.

Passive income through rental properties is great for long term wealth if you can weather the day to day issues and the economic changes. There are a lot of seminars related to how to acquire properties but not much out there regarding managing it. Even after 9 years of owning properties, we still have a lot to learn. Some of the resources we use are Apartment Owner’s Association and PrePaid Legal to check on the legal forms and landlord tenant issues.

While having passive income can be good, having residual income is even better. Getting paid daily on what others do is great. This is leveraged time. Sell a membership once and make a commission for the life of the membership makes so much sense as a business. There is less risk and basically very low start up costs. Where else can you start a business for $72? Imagine the income potential where others are helping each other make money. Ongoing business system and personal development training is provided on a regular basis by people who are successful and active in the business.

I can only wonder what our PrePaid Legal business would be like had we started it 10 years ago. I guess things happen for a reason so our involvement in real estate investing led us to PrePaid Legal. Maybe being a part of the Live Out Loud program and the Big Table led us to this path. I know we are not the same as when we first started the program. We have learned a lot and developed lasting relationship with the people associated with Live Out Loud and the Big Table. We will continue to volunteer at the Cash Machine Workshop in LA/Orange County to help others and to reinforce our learning. Look for us at the next event.

Amy Yoshimitsu
Lois Threlkeld

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