Residual Income Business: Six Types of Passive Income Businesses

by Chuck
(MD)

In my opinion, everyone should have a residual income business. A residual income business is a business that provides consistent cash flow for something you did one time. Fortunately, there are many different ways to build this type of business. If you have sufficient capital, that gives you more options. But, even if you are broke, you can build a good passive income business, as long as you are willing to invest some sweat equity.

The most common types of residual income businesses include:

1. Insurance Agent: Many insurance agents earn residuals when their clients renew their insurance policies each year. Additionally, the broker earns overrides from sales by agents working for him.

2. Real Estate Investor/Landlord: If you want to buy investment properties and rent them out, you can earn passive income. Your secret is to find investment properties that produce a positive cash flow each month, after expenses.

3. Author: Writing books can provide passive income. However, most authors don’t sell enough books to earn a good living doing this. The only exceptions are the really well known authors. I prefer eBooks instead. They are more profitable and easy to sell.

4. Infopreneur: An infopreneur is someone who sells information. For example, a blogger is an infopreneur. He can write about a topic he is passionate about and then sell advertising on the blog. Or, he can write eBooks, hold seminars, do webinars, create training videos or a variety of other venues. This is how I make my full-time living, combined with network marketing.

5. Network Marketer: I’m a big fan of network marketing. If you develop your sales and marketing skills, and apply that knowledge, you can build a large sales organization that reorders products month after month. You earn overrides and commissions from each sale, which provides passive income. Some people in network marketing make more money than Fortune 50 CEOs.

6. Storage Units: Storage units are awesome. My parents own a storage unit business and swear by it. It’s much easier than being a landlord of apartment buildings or homes. Plus, storage units typically have a shorter pay-off cycle. And they’re cheaper than buying or building houses.

Obviously, each business model has advantages and disadvantages. Your key to success is to pick a model you are passionate about and knowledgeable about. Additionally, your amount of available capital might dictate what you can or can’t do.