I am not sure how accurate that statistic is, but there does appear to be some truth in that statement and it does capture my attention, as I am sure it has many others looking to enter the real estate game as a means of wealth creation.

Perhaps you’re considering buying your first rental property as an investment. You’ve read books by Donald Trump and Robert Kiyosaki, attended a few seminars, and are now ready to take the plunge. Or perhaps you’re the seasoned investor looking to diversify your portfolio or leverage the equity on an existing home. Either way here are a few things to consider.

Eligible properties:

• Maximum four units if multi-family

• Purchases, new construction, and existing properties

Non-eligible properties:

• Rooming houses

• Time share units

• Rental pools

• Commercial/industrial zoned properties.

Other Details:

• Purchase with as little as 20 per cent down payment.

• Refinance up to 80 per cent of the property’s current value.

• Eligible for a line of credit with interest-only payments based on reduced loan-to-value.

• Corporate entities eligible with personal guarantee.

• Amortization up to 30 years.

An experienced mortgage professional that has worked with rental properties before can assist with determining the right structure for this endeavor.

Of course, there are other items to consider as well, such as if you manage the property on your own or if you hire a professional management company.

The variable costs involved to maintain the property (maintenance, vacancy contingency, etc.) should also be considered.

Additionally, if you are considering becoming a landlord, you will want to know your rights and the rights of your tenants

Robert Kiyosaki’s books saved me from a life of struggle during my retirement age. His message was that you have to have passive income from either a business or an investment. I had a business at the time (sole proprietor, not really a business) and thought okay now I need to invest in real estate like Robert Kiyosaki. That was a life changing decision.

Everything he said made sense. Buy property based on cash flow not on appreciation. I started reading everything I could on real estate investing and decided a condo or small single family home make sense as investments.

Reason #2

His books provided a solution for financing our first investment property. The first challenge was where will the down payment come from? Fortunately my boyfriend/now husband had paid off our home so there was equity available to use for down payments. The next step was to research the rental market in the area we were going to invest in. This information is available on the internet. (See rentometer.com) You can also go into the city department of economic development and see what is going to happen in the future in the area you are considering.

Reason #3

He described how he found his investment property in his neighborhood which made me more aware of what was going on in my neighborhood. I found our first rental in the neighborhood where we live. I passed the house everyday and it did not sell. This was strange since the rest of the homes in the area were selling pretty swiftly. Six months later that home was still for sale so I decided it must be mine. We closed on the property one month later. That home turned out to be the best single rental we had.

Reason #4

His books taught me how to evaluate property to determine if it is a good investment for me. We had to calculate the cash flow of the property before we purchased it. The important to remember is you do not want to use your money to pay off your mortgage. You want the tenants to pay for it. So, I know you are asking yourself “how do I know what the cash flow is?” The information below gives you the basic calculations that you will need to make a decision to buy a property.

Purchase Price: $100,000

Monthly Rent (income): $1,000

Monthly Expenses:

Water $50

Electricity $0

Trash $0

Homeowner’s Association Dues $120

Repairs $100

Landscaping $50

Snow Removal $0

Anything else $100

Total Monthly Expenses $420

Remaining Cash to Pay Debt $580

Debt: Principle, Interest, Taxes $575

Cash Flow $5

Okay, the cash flow is $5.00. It looks like a pittance, which it is. You would need to be able to raise the rent to $1,200 per month. Then you would be making $205 per month. That is cash flow. The cool thing is the renter is paying off your mortgage and taxes and you can deduct the taxes, interest, and expenses from your income tax. Oh Yeah and you are allowed to deduct depreciation. What a gonga!

Back to why I love Robert Kiyosaki. If he had not written his books, had his seminars, etc. we would not have had the guts to venture into the real estate investment arena. We would not own a mobile home park with 17 homes (we own them all) that will be free and clear in three years. At that point all of the income comes to us for our retirement.

We are now working on a business venture of direct sales of internet marketing training so that we can buy more real estate. My husband says he is going to buy a really big park this time.

If you are lost and are not sure where to turn read Robert Kiyosaki’s books you cannot go wrong if you follow his advice.

Thank you Robert Kiyosaki!

Holding rental properties seemed like such a simple way to create passive income. Buy a house, put a tenant in there, and collect rent. Easy as making a pie. Or so I thought.

And, you know what? It actually is pretty simple. And it’s definitely enabled myself and my husband Dave to enjoy a lot more freedom than any job ever could. We are making money from our properties each and every month and each property grows our wealth a little (and sometimes a lot) each year. Once upon a time we would have said we are earning thousands of dollars each month in passive income, but we no longer do.

The problem with pursuing “passive income” is that you’re telling yourself you don’t have to do any work to make that money.

Keith Cunningham, author of Keys to the Vault says, “The label becomes the experience. Using the word passive for anything means that you are going to do the least to get the most.”

That might sound like a great idea but the problem is that trying to build wealth through passive income is like trying to get six-pack abs without working out. It isn’t going to happen. You can’t do nothing and expect to get positive results.

When you buy a property, hire a property manager, and then do nothing more than deposit the rent money into your bank account, you’re setting yourself up for trouble. We know! We worked hard to find the properties, bought them, and then passively let things fall apart!

Now, my husband Dave reviews all the bills and talks to our property managers on a regular basis. For the properties we manage ourselves, we do regular walk-throughs and monitor any bills that are sent our way. We both carefully track and monitor the money that gets spent on each building.

Doing this is far from a full-time job. It really doesn’t require a lot of time and attention. When things are running smoothly it takes less than an hour or two a month for each property to measure, monitor, and adjust to maximize our profits and minimize our struggles and expenses. We no longer believe it’s a passive income source – one could call it leveraged and it definitely has a very high return on time invested – but we do not call it passive. And since we stopped considering real estate to be a passive income stream, we have less problems and we make a whole lot more money!

In order to start such an inward cash flow, you may refer to some interesting passive income sources. It must be noted that the economic term residual income is synonymous to passive income. However, before we proceed to examples of passive income opportunities, let us first understand the advantages of such an income flow.

Advantages of Passive Income
There are many advantages of passive income, some of them have been listed as below.

• A passive income cash flow always ensures that a small amount of cash is always at your disposal.
• Though the income generated is comparatively small, you will find that you are never out of cash.
• Petty expenditures can be easily fulfilled with such a small scale income.
• Another very good advantage is that passive income is counted as a source of income, in case if you are availing any credit facility, such as a loan or a credit card.
• Passive income also comes in very handy during economic recession, when the rate of unemployment, layoffs and bankruptcy goes up.

Passive Income Ideas
Passive income ideas can always be found in plenty. The key to generate such a passive income is to think positive, unique and creative. Here’s what you can do.

1. Investments: This a pretty old idea of generating income through investments. Even though this idea is old, it is a very effective one. The key to make investments that have a good rate of return, is to learn the craft of investing. In order to become a really good investor, you might take up some activities such as making intelligent observations of stock markets, studying the corporations and companies that you are planning to invest in, purchasing good bonds and securities, etc. You may also take up some advanced activities, such as balance sheet analysis or studying credit rating. As a word of caution and also a fellow investor, let me give you some really sound advise. Be mentally prepared to substitute the amount that you have invested and avoid making too many investments in the same company or corporation.
2. Real Estate: Real estate investment is another method of earning passive income. You can try out something more intelligent such as purchasing a farm or farm house, and renting it out or renting out a piece of land for a longer period of time. Some people have also tried out other types of rentals such as renting out cars and bikes. A friend of mine went to the pinnacle of rentals. He built tree houses throughout his farm estate and rented them out.
3. Agro Based Activities: In a world of diet and health conscious people, you may start cultivation of fresh fruits and vegetables. You may also use some innovative ideas such as supplying the entire weeks meals according to the person’s diet plan. The money maker would be the fact, that the fruits and vegetables are fresh and you have cultivated then. If you have a larger piece of land, you may also start making organic fertilizers.
4. Eco-Friendly Equipment: Just as the world is getting health and diet conscious, it is also getting conscious about the environment. In order to save the environment and make money at the same time, you may start manufacturing eco-friendly gadgets in your backyard. For example, you may start building solar cookers, solar panels and fuel cells. You can also add your own innovations to these gadgets. For example, you may make a guitar amp that works on solar energy.

There are several other passive income ideas that you can use in order to have an extra inward cash flow, such as network marketing, or multi level marketing, generating income online, or selling branded products for a commission. The passive income streams that are bound to work best are the ones where you use your own creativity and skills.

John, who works for a city government, and his wife, Linda, a computer analyst, have built several million dollars in investment real estate equity (the difference between the property’s market value and debts owed) over the past three decades. “Our parents owned rental property, and we could see what it could do for you by providing income and building wealth,” says John.

Investing in real estate also appealed to John and Linda because they didn’t know anything about the stock market, so they wanted to stay away from it. The idea of leverage — making money with borrowed money — on real estate also appealed to them. John and Linda bought their first property, a duplex, when their combined income was $20,000 per year.

Every time they moved to a new home, they kept the prior one and converted it to a rental. Now in their 50s, John and Linda own seven pieces of investment real estate and are multimillionaires. “It’s like a second retirement, having thousands in monthly income from the real estate,” says John.

John readily admits that rental real estate has its hassles. “We haven’t enjoyed getting calls in the middle of the night, but now we have a property manager who can help with this when we’re not available. It’s also sometimes a pain finding new tenants,” he says. Overall, John and Linda figure that they’ve been well rewarded for the time they spent and the money they invested. The income from John and Linda’s rental properties allows them to live in a nicer home.

We all want to get to a place where we have ongoing, hands-off income that continues without us having to work for it. These ads play into that desire by offering us the promise of “easy continuing income.”

The reality is often far from the sales pitch.

The first step in developing an ongoing, passive income is to dispel some of the myths surrounding the sales hype.

Here are some of the most common myths about creating a passive, ongoing online income:

Myth One: Put up a Website and Sit Back and Collect the Checks.

Those of us who have run Internet businesses for a while can tell you: Making a good living on the Internet requires marketing, customer service and order fulfillment. Either you have to do it yourself or you need to hire someone to do it. Either way, having a website and selling your own products is often far from the “laying around on the beach while collecting your checks” image.

Myth Two: MLM/Networking Income is Residual Income.

Almost always a part of the sales pitch in networking is “creating residual income.” While that is *possible* with MLM, it is very difficult to maintain. Here’s why…

MLM income is built on three basic factors: new purchases by retail customers, the recruiting of new *wholesale* customers and the ongoing purchases by both groups. In order to have an ongoing “residual” income, you need to recruit, train and motivate a sufficient number of *leaders* who will then continue the process in growing numbers.

This is rarely the case.

Instead, top leaders have found it is easier to build a large list of MLM “junkies” who they then take into one program after another. If you stopped joining new programs, your income would also dwindle within a few months.

Myth Three: Just Build Your Business and Hire People to Run It for You.

This does work, but it is often more of a nightmare than a dream.

At various times I have had anywhere from 0 to 15 employees. I have had many friends and clients with much numbers up to 1,000 employees. We all have the same opinion: Unless you have enough employees and profits to hire top quality managers, employees are a constant headache.

If you DO build a big enough, profitable enough, business and if you have the right personality, then building your business and hiring people to run it is a great idea.

Myth Four: Developing A Passive Income is Easy.

I don’t want you to fall for this one, either. Developing a passive income will take some perseverance. The steps to getting it done are not difficult, but it requires one thing many people will not put in — consistency. If a person does the right things, day after day, they will create an ongoing, growing income. If they try today, then one day next week, then one day a month later, they are unlikely to ever get there.

Developing a passive, on-going, hands-free income is worth the effort. Avoid trusting in these four fantasies, get ready to work and you can have a supplemental income in no time at all. Keep it up long enough and you can eventually retire.

There are manifold ways to generate asleep income. We can generate asleep income by investing into stocks and bonds, correlative funds, physical estate, commodities and likewise investing in businesses. Robert Kiyosaki in particularly love using physical estate to generate asleep income.

What transcendent work for Robert Kiyosaki might not be the best for you. Before deciding which is the best asleep income generating investment methods for you, attendant are 5 greater factors which you might want to consider:

1) What is the initiatory cash outlay?

Obviously, the first question is what is the initiatory cash outlay, if any, for your investment instruments.

Is it a former cash outlay? Or is it a recurring investing scheme, where you need as well to invest manifold money into that instrument to maintain generating the calm of asleep income that you need?

How stringy do you need to maintain that recurring investment? Is the recurring investment amount perpetual or will it increase or decrease or undeviating fluctuate added? Does the fluctuation depend on further factors?

Is expert any further fees like maintenance charges or yearly renewal charges?

2) What is the physical clear rate of return?

What is the rate of return of your investments? Is it a clear rate of return?

What is the return frequency? 2% per annum? 2% in 5 years? 2% in 10 years?

What are any of the greater factors which can affect the rate of return?

Can the return be compounded upon the themselves?

3) What are the risks involved?

What is the risk exposure of your investment instruments? Is it classified as colossal risk, middling risk or crouched risk.

Could you lose your initiatory investment and/or your earnings if you are not aware?

One point to note is your peculiar risk profile and your pocket goals. Usually the return are colossal as the risk calm goes up. So if your pocket cool is to aggressively building up your wealth quickly, you might opt to go for colossal risk investment almost on one of the colossal return.

The meat-and-potatoes line howbeit, is almost on one absolutely aware of the risk involved and suddenly make a judgement call based on the risk and reward involved.

4) Is the return surely attainable?

Can you get hold of the earning generated when you need it?

Or is the earning generated only attainable in calm frequency or period? Monthly? Quarterly? Year? Only at the first month of the year? Only at the 1st week of the month?

How is the earning returned to you? Via objective checks? Fund transfer? What is the lead time for delivery?

Is expert any further fees involved? Like fund transfer charges, withdrawal charges?

5) Are your investments truly asleep?

Do your investments require perpetual monitoring? Do you need to constantly watch the markets at peace to avoid losing inherent earning and/or vital sum? Do you need prolonged effort to manage and/or maintain your investments?

For example, if you have physical estate, you might need any effort/time or money to maintain it. I remembered that Robert Kiyosaki had to deal with toilet problems in his first skimpy physical estate investments.

All these questions will hopefully help you to determine the viability of your investment instruments to generate decent asleep income to fund your lifestyle which you want.

Anyone who has read the book Rich Dad, Poor Dad thinks that Robert Kiyosaki is all about investing real estate and buying rental or commercial property in order to achieve the financial freedom of their dreams. So, they instantly start putting all their money into real estate.

Reality check: That’s not book’s message. I try to listen patiently (after all I also believe that real estate can be a great investment vehicle), but the reality is you need a solid plan to achieve financial freedom, not a one off strategy.

Authors Robert Allen, Robert Kiyosaki, David Bach, and many, many talk about building multiple streams of passive income, that means having more than one investment vehicle, and making sure all those vehicles deliver passive income.

For beginners: passive income is income that comes in day in day out without you having to work to get it. Put simply, you are not trading hours for dollars. A true passive income business is one that if you were to leave it alone for a period of time, such as a year, you could return and find it more profitable (or at least generating the same level of income) as before you left. Passive income investments are the true path to financial freedom.

So what is the principle that Rich Dad truly talks about. He calls it the Power Investing Principle.

1 – Start a part-time business for the cashflow & tax advantages.

2 – When the market is right invest in real estate. (Now is not the time.)

3 – Invest your excess cash from the real estate in paper assets.

Unfortunately, a lot of people jump into step 2, real estate, without a lot of background knowledge about how to make that investment a lucrative one.

Here’s a clue, the property needs to generate passive income (that means it should be putting money into your pocket not taking money out). Capital gains (betting on an increase in value) should be a bonus not your sole reason for buying.

One of the first steps in building a solid passive income plan is to identify how you plan to generate passive income. The plan should include a number of sources including businesses, real estate and paper assets. The reason for this is to create a stable platform on which to build financial freedom you need all the elements.

Now, lets go back to the power investing formula and look at number 1: Build a business. Why do you want to build a business first? Simple: businesses provide the financial backing (cashflow) to support real estate investing. Makes sense right?

While there are only three steps in the power investing principle, you need to take the time to understand the systems behind each one. For example, master the business building system then move on to the system for residential real estate investing.

Taking it step by step will lead to prosperity and reduce your risks along the way.

Anyone who has read the book Rich Dad, Poor Dad thinks that Robert Kiyosaki is all about investing real estate and buying rental or commercial property in order to achieve the financial freedom of their dreams. So, they instantly start putting all their money into real estate.

Reality check: That’s not book’s message. I try to listen patiently (after all I also believe that real estate can be a great investment vehicle), but the reality is you need a solid plan to achieve financial freedom, not a one off strategy.

Authors Robert Allen, Robert Kiyosaki, David Bach, and many, many talk about building multiple streams of passive income, that means having more than one investment vehicle, and making sure all those vehicles deliver passive income.

For beginners: passive income is income that comes in day in day out without you having to work to get it. Put simply, you are not trading hours for dollars. A true passive income business is one that if you were to leave it alone for a period of time, such as a year, you could return and find it more profitable (or at least generating the same level of income) as before you left. Passive income investments are the true path to financial freedom.

So what is the principle that Rich Dad truly talks about. He calls it the Power Investing Principle.

1 – Start a part-time business for the cashflow & tax advantages.

2 – When the market is right invest in real estate. (Now is not the time.)

3 – Invest your excess cash from the real estate in paper assets.

Unfortunately, a lot of people jump into step 2, real estate, without a lot of background knowledge about how to make that investment a lucrative one.

Here’s a clue, the property needs to generate passive income (that means it should be putting money into your pocket not taking money out). Capital gains (betting on an increase in value) should be a bonus not your sole reason for buying.

One of the first steps in building a solid passive income plan is to identify how you plan to generate passive income. The plan should include a number of sources including businesses, real estate and paper assets. The reason for this is to create a stable platform on which to build financial freedom you need all the elements.

Now, lets go back to the power investing formula and look at number 1: Build a business. Why do you want to build a business first? Simple: businesses provide the financial backing (cashflow) to support real estate investing. Makes sense right?

While there are only three steps in the power investing principle, you need to take the time to understand the systems behind each one. For example, master the business building system then move on to the system for residential real estate investing.

Taking it step by step will lead to prosperity and reduce your risks along the way.

But if you want to achieve financial freedom, you should not just work hard but work smarter! Yes, you will earn more by working harder. You will work even harder if you got promoted because of the additional responsibilities and tasks that will be assigned to you. You will become probably rich because of overtime and pay raises but definitely you would sacrifice a lot.

You will risk your health because of stress. You will lessen the time for your family and friends. In short, you will not enjoy the fruits of your hard work if you will only just work harder. Added to that, the government is your number 1 beneficiary if you work harder. Your pay gets taxed first even before you get it.

Don’t just work hard, work smart too. How to work smart? Here are some of the the things that you could do to work smarter!

Work like a smart entrepreneur. If you have the capacity to become an entrepreneur, start a business. An entrepreneur leverages his resources and hires people who are smarter than him to work for him. Yes, he will work but on the supervisory level only. He delegates tasks and he gets rich by doing it. These are the tactics of taipans and tycoons.

Learn financial intelligence. If you would just work hard and even harder, you will definitely end up burnt out of your work. If you are financially literate, you would accumulate assets while you are working. And as these pile of assets accumulate over time, it would be sufficient to provide you with your needs without working. Choose to be the ‘rich person’ as Robert Kiyosaki said and not the ‘poor’ and ‘middle class’ persons who buy liabilities they think are assets.

Work for passive income. As I already mentioned in previous posts, passive income is your money working for you. Try to work little by little for passive income while you have your job. And as your passive income grows, then that would be the time to go full time for it.

Ultimately, working smarter is shifting from either the Employee (E) and Self Employed (S) quadrant of the Cashflow Quadrant to either Big Business Owner (B) and Investor (I) quadrants.