Passive income in its purest form is sitting back and accumulating wealth.
It is like having a second job, and in many cases, a person can earn as much or more from passive income as they are from their current job.
Passive income can be in the form of royalties from something you’ve invented or published. Passive income can also be from stock dividends and interest payments from fixed-income investments like bonds.
The most popular way to accumulate wealth through passive income is with real estate rental property. Some people don’t consider rentals passive income because a landlord usually has to do some work on the property.
Usually, when a tenant calls with a problem, the property owner will respond and take care of the problem.That is still considered a passive income. And it is a misperception that generating a passive income from real estate requires no work.
Many investors will begin by buying one single-family home for rental property. Or they become accidental landlords by moving out of their current starter home, buying a bigger house, and renting their former single-family home.
Starting with a single-family rental is a great way to learn the basics of passive real estate investing and build wealth. Many landlords have put their children through college by owning one or two single-family homes for rental property.