Specific Approaches to Passive / Residual Income Generation

[lgas]

I'm doing research on passive/residual income generation. My goal is to create as big a list as possible of specific things you can do to generate passive or residual income and then collect as much information as possible about each specific strategy - for example:

- Upfront capital requirements
- Ongoing capital requirements
- Upfront time investment required
- Ongoing time investment required
- ROI

etc.

My primary motivation is to have all of the information I need about what the best use of my time/capital is in my own efforts to create passive income. My secondary goal is to create an e-book with the results of my research and sell it to others to help provide them with the same information as well as to create a passive income stream for myself from e-book sales. (Just to be clear I'm not just trying to create another clone of the millions of "get rich quick" e-books out there -- I want to collect information that is actually valuable to me, and my assumption is that there are others in a similar situation that will find the same information genuinely valuable too).

For the purposes of my research I would consider things that would normally be considered portfolio income to be passive or residual income as well, assuming that they are actually income producing techniques (e.g. investing in dividend paying stocks) and not growth strategies (e.g. investing in growth stocks or arbitrage, etc).

Basically the definition I am working with is any technique/strategy where you put in an initial time/capital investment that creates an ongoing/reoccuring income stream that continues to flow after you stop/minimize your initial time/capital investment.

I have collected an initial set of approaches as a starting point, but I am looking for other ideas of specific techniques. In other words, "invest in real estate" is not a specific technique, but "buy a house/condo and rent it out with positive cash flow" is. "Invest in the market" is not a specific technique, but "buy dividend paying stocks" is.

Just to be clear, right now I'm not interested in collecting only the "best" strategies, but rather I'm interested in any strategy that qualifies. For example, "opening a savings account" qualifies under my strategy even though it's generally not going to make anyone wealthy. I think having examples that cover the spectrum from the low end (e.g. savings accounts) to the high end (e.g. build a real-estate empire) will be useful to help highlight some of the non-obvious factors that influence the value of each particular approach.

What I have to gain from this discussion is obvious, but I'm not just looking for people to do my work for me -- I think this thread could be benefitial for everyone, and I am happy to contribute more results from my research going forward if I come up with anything useful. I'm also happy to answer any questions that I can about the details of any of these techniques.

To start, here are the specific techniques that qualify under my criteria that I have collected so far:

* Banking
- High-interest savings accounts / money market accounts
- CDs
* Securities
- Dividend-paying stocks
* Insurance
- Annuities (fixed or variable)
* Real Estate
- Renting out individual rooms / in-home B&B
- Rental properties
- Buying notes
- Writing notes
- Hard money lending
* Royalties
- Writing songs
- Writing books
- Writing screenplays
- Photography [specifically owning photo rights]
- Buying rights to existing works (songs/books/screenplays/photos)
* Starting a business
- Coin-operated vending machines
- Franchises
* Internet Marketing
- Affiliate marketing
- PPC advertising
- PPC arbitrage
- Writing e-books
- Blogging
- Automated eBay businesses
* Network Marketing (MLM, etc)
- Amway and related ventures
- AGLOCO

One specific area that I feel my existing list is especially weak is in the "start your own business" category. Obviously if you can start and grow any business to the point where you have managers and other staff that handle most or all of the day-to-day activities you will have succeeded in generating passive income, but I think the failure rate, upfront time investments and general vagueness make "start any business and make it successful" too broad of a technique to include, so I am looking for specific examples of businesses which lend themselves to passive income generation (such as the one good example I have, coin-op vending machines).

Also, if anyone has any relevant experience with any of the specific approaches I've listed (or that subsequently get listed in the thread) that are outside of the topics that are usually discussed here, I (and I'm sure others) would love to hear about it.

[BradleyT]

So you want us to write your e-book for you?

[SanONeill]

You're ebook includes AGLOCO and it's not another [censored] get rich easy scam book? Are you sure about that?

[lgas]

[ QUOTE ]
You're ebook includes AGLOCO and it's not another [censored] get rich easy scam book? Are you sure about that?

[/ QUOTE ]

Well, at this point I'm pretty much just trying to compile a list of things that should be included. Of the things on the list I am pretty well versed in dividend paying stocks (my roommate does quite well with this strategy), landlording and room rental (my business partner has a side business doing this), I have at least a passing understanding of the banking and annuity strategies and I am familiar with some of the internet marketing stuff. Other than that, I am pretty unfamiliar with the rest. I have know idea about royalties, amway, etc. All I know about AGLOCO is that I've seen it mentioned a lot lately and what I've read on their website.

I included AGLOCO in my list because it's been a very hot topic lately and from reading the website it seems to fit the criteria -- you install their viewbar thing and then you earn reoccuring revenue for up to 5 hours of surfing per day. At least for people that are already online >= 5 hours a day, it seems like it would bring in income (probably very litte, but >0) with little or no investment of time and no investment of capital.

Do you think I should not include it? If so, why not? Do you think it's a ponzi scheme? My understanding is that while the pyramiding may run out eventually, all the people that sign up still get paid... so people may not be able to grow their networks past a certain point, but that's it. Or are you not objecting to my inclusion of it in the list, but you just think it has a "get-rich-quick" connotation associated with it (which I would definitely agree with)?

As for the comment about writing my e-book for me, since I went out of the way to try to make it clear that that was not the purpose of my post, I'll assume that was sarcasm (or leveling or whatever you want to call it in 2+2 speak) but in case you are serious, people are making money selling complete garbage e-books that basically just say "How to get rich: copy this ebook and sell it on clickbank" all the time. If I wanted to jump on the bandwagon I wouldn't need help from this forum, I'd just write that book and put it on clickbank.

FWIW, at this point I'd say the odds are at least 3-to-1 against that I will have enough spare time to actually turn any of this information into a real e-book and manage to "publish" it, but even if I don't get to that point, I think I will learn a lot from this excercise, whether I get help here or not. I just thought this would be a good place to find like minded people.

Also, if I ever do get to the point where I create an actual e-book, I'm happy to give it away for free to members of this forum, and if I never get around to finishing the book, I'd be happy to share whatever final set of notes and other research I wind up with with the forum for free.

I realize that, (especially in [sub]forums) dedicated to money making and internet marketing and the like there are a lot of worthless people that are trying to spam affiliate links, get something for nothing, and generally leech off of the goodwill of the other forum members, and sometimes it's hard to tell who is who. But you have to be careful because if you take this attitude to the extreme then "you're just trying to get free knowledge with no work" becomes viable response to any post.

Anyway, I'm seeking the same type type of insight and mentoring that can be found on the strategy forums, just not for poker in this instance. As I've tried to make clear, I will try to contribute in kind. But, anyway, I'm done trying to justify myself. It's up to the other posters to make this thread great, or let it suck and die.

In the meantime, in an attempt to add more signal to the noise in this thread, I figured I'd include a link to this blog post which is what made me include the coin-op vending machines strategy in my list. It's obvious that this simple approach won't turn anyone into a gazillionaire, but I think it's still a very helpful article. Also, had I done something like this coming out of school (10 years ago), and taken it seriously, I believe I could have scaled it into a 7 digit almost 100% passive income generator by now.

http://geniustypes.com/2007/business...assive_income/

And no, this is not my blog or anything.

[maxtower]

A lot of the things on your list still actually require time. Becoming a landlord, running a website or a business, etc...
There are very few entirely passive investments.

[lgas]

[ QUOTE ]
A lot of the things on your list still actually require time. Becoming a landlord, running a website or a business, etc...
There are very few entirely passive investments.

[/ QUOTE ]

I agree completely... I think a savings account is about as close as you can get to a completely passive investment. Everything else requires time. Even with investing in bundles of dividend paying stocks you have to monitor the companies and make sure they aren't cutting or reducing dividends and handle capital gains/losses as they occur, etc. Even with royalties my guess is that you have to be constanty defending your intellectual property against abuses or people will rip you off and you'll miss out on money due to you, etc.

However, this is why I included the phrase "minimize your time investment" in my original definition. My business partner has made herself a millionaire through landlording in less than 10 years and she spends only a couple of hours a month on it. This fits my definition of passive quite well.

On the other hand, my roommate has made himself quite a bit of money (less than a million, but working on it) in just 3 years of investing in dividend paying stocks and he probably only spends a couple of hours a YEAR on it. So, his activity is much more passive, but then again, it requires more capital (he continually adds capital from his day job paycheck)... whereas my business partner's real estate business was built by taking an initial down payment and leveraging it into multiple units, etc. without ever adding more cash... so it's less passive but requires no additional capital after a point. My roommate would continue to earn money without adding additional capital, but it would be much slower. These are the types of issues I want to catalog and compare and contrast across as many different approaches to passive income generation as possible.

[maxtower]

I guess I am not too sure what your goals are with this research.

Everyone knows about the pure passive income plays, like dividend stocks, bonds, and savings accounts. Just put your money in and earn. The problem is that you have to put in a lot of money to earn anything worthwhile, since most of these purely passive plays pay out around 4-6%.

Your friend in real estate probably did well because of the huge run up in real estate values the last 10 years. No time in the history of the US has been even close to as good for real estate. Landlording in the future will be much less profitable I would imagine.

This only leaves businesses that can be started which pretty much run themselves once started. I don't know many businesses like this, but I would love to hear your findings on this.

[pipes]

[ QUOTE ]
I guess I am not too sure what your goals are with this research.

Everyone knows about the pure passive income plays, like dividend stocks, bonds, and savings accounts. Just put your money in and earn. The problem is that you have to put in a lot of money to earn anything worthwhile, since most of these purely passive plays pay out around 4-6%.

Your friend in real estate probably did well because of the huge run up in real estate values the last 10 years. No time in the history of the US has been even close to as good for real estate. Landlording in the future will be much less profitable I would imagine.

This only leaves businesses that can be started which pretty much run themselves once started. I don't know many businesses like this, but I would love to hear your findings on this.

[/ QUOTE ]

Landromats?

[DrewDevil]

[ QUOTE ]
I guess I am not too sure what your goals are with this research.

Everyone knows about the pure passive income plays, like dividend stocks, bonds, and savings accounts. Just put your money in and earn. The problem is that you have to put in a lot of money to earn anything worthwhile, since most of these purely passive plays pay out around 4-6%.

Your friend in real estate probably did well because of the huge run up in real estate values the last 10 years. No time in the history of the US has been even close to as good for real estate. Landlording in the future will be much less profitable I would imagine.

This only leaves businesses that can be started which pretty much run themselves once started. I don't know many businesses like this, but I would love to hear your findings on this.

[/ QUOTE ]

They may not be "passive" per se, but real estate investing in general, and landlording in particular, will continue to be highly profitable, now and forever.

[lgas]

[ QUOTE ]
Landromats?

[/ QUOTE ]

Landromats are a good example of a business that is pretty darn passive. I think automatic car washes are another. Self storage is another, although it's only passive because you would be hiring someone to work there -- but you wouldn't have to pay them very much and the people leasing the space should be paying off your mortgage on the land and then some.

Another interesting passive income opportunity I ran across today was oil royalties.

Here is a link to a page on time.com explaining the basics in case they are not self-explanitory:

http://www.time.com/time/magazine/article/0,9171,741822,00.html

I would love to hear from anyone that has an experience relating to this type of thing.