income streams

Rob paints a picture of a bathtub for our group members. The faucet has several income streams ideas coming from it. Rob lays out several examples of passive and active income. The “nest egg” plan of the IRA isn’t the best retirement investment plan. If you combine regular passive income and other investment strategies, along with your 401k, then you have a solid plan.

Income Streams from different sources help build wealthIncome Analogy – Passive and Active Income Streams

Once the attendees draw up the bathtub running the income streams, Rob has them make blanks below with “active income” and “expenses” headings. He then lays out several categories of income sources by how they are taxed. W2, rental, capital gains are all different examples.

Active Income

Rob starts the discussion on active income by clarifying that the term could have different meanings to different real estate investors. To him, active income streams are defined by investing more than ten hours per month into them.

Active income streams obviously include conventional 9-5 jobs taxed with a W2 tax form. If you invest in rental properties, and do not employ a property manager, this investment is likely qualified as active income.

Passive Income Streams

In Rob’s businesses, spending less than ten hours per month on an investment qualifies it as passive income. For example, you could buy a plot of land, do nothing with it for over a year, then sell it. Whatever profit you make is passive income, since you put no work into clearing the land or building a property.

Passive Residual Income

Finally, Rob details passive residual income. He provides the example of investing in a single family home or apartment complex. The owner may not spend much time on maintaining the property, but it is a consistent, passive source of income.

Passive Residual Income Streams For Retirement

Rob goes on discuss passive residual income streams as part of a retirement strategy. Most of us contribute to an IRA account for our retirement plan. Ideally, you sock away enough money to live off of during your golden years, drawing a necessary amount each month.

He does not subscribe to this “nest egg” theory. The passive residual income streams of his properties, as well as interest from his retirement investments pile up to cover his living expenses. In the end, the main goal is passive income streaming in each month to provide security when he can’t, or just doesn’t wish to, work full time hours anymore.

Lastly, Rob provides the example of a business owner who owns a successful laundromat. It does much more  business than its competitors. Rather than using the extra cash to educate himself and create passive income streams, he just spends it on a more lavish lifestyle. When he feels ready to quit, he sells the laundromat, and has a bag of money to retire on. This may or may not suffice to maintain the lifestyle he is used to. Without the passive residual income to supplement the money from the sale, his future is uncertain. He could outlast the nest egg and be a burden on his loved ones.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

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