Written by: Jorge Contreras, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
The term Passive Income gets thrown around a lot in financial circles. You’ll hear it from business owners, side-hustlers, and even employees wanting to break out of their 9-to-5. But, what is it really and how do you achieve it?
What does passive income look like?
According to the Internal Revenue Service or IRS, passive income is earning money without regularly spending time working for it. It is defined as a type of income that you can get from two sources: rental property and a business that you don’t actively participate in.
Unlike being employed, these income sources tend to generate money on their own without you allocating a certain amount of time on it. But just because you’re not actively working, doesn’t mean you can simply manifest it into existence, either.
Bottomline: Passive income is not a “get-rich-quick” scheme.
Most people think that once you start a business, you'll automatically be successful. But if I’m being honest, choosing to take this path takes way more courage and work than you might think.
In fact, you need to take MASSIVE action if you really want to reap all of the long term benefits.
But the good news is — most of the work you need to do is upfront.
Yep. And this means that if you set your business up properly, build a system for it to run smoothly, and find the right people to manage everything, you'll get your desired results and find yourself running a business on AUTOPILOT.
Why do you need passive income sources anyway?
Getting a regular income that requires less effort compared to having a daily job is already an advantage.
But if you’re still not convinced as to why you should start creating a systematic way to add money to your account even while you’re asleep, here are 3 more reasons to consider it.
1. It allows you to have multiple streams of income
The recent pandemic has highlighted just how unstable a lot of our income sources are. A great deal of companies closed and some big businesses even went under during the economic fallout. So for people whose only sources are jobs that are connected to an unstable economy, these frightening scenarios are totally out of their control.
This is exactly why it's smart to have multiple streams of income in order to be financially independent. And getting a passive side hustle that doesn’t rely on a current job is now slowly becoming a necessity rather than an option.
2. It gives you time to spend on more important things.
Another reason why it’s important to have a more passive income source is that it gives us the freedom to use the time we have for other things.
You see, time is a non-renewable resource and unlike money, you won't be able to earn it back.
But when you have a business that runs and makes money for you, you become free to get rid of the alarm clock, leisurely spend time with the people you love, and do more of what you've always wanted without having to worry whether the paycheck will be enough for the month.
3. The last reason is passive income can give you long-term wealth that you can pass on to the next generation.
Most passive income streams allow you to reap financial rewards that you can still use in the years to come.
Rental properties, for example, can become your cash cows because you can regularly receive money through rent. And this system can go on and on for as long as you want.
Plus, you can even teach your business strategies to your kids in the future so they can build one themselves.
So, what are some passive income ideas?
Now that we know how passive income works and why it’s important let’s explore some examples of the passive income businesses you can create.
As mentioned, there are 2 types of passive income.
One is the business that you don’t have to participate in actively. Some examples of this are:
Stock dividends
Selling online courses
Writing an ebook
Selling designs online
Creating a blog or YouTube channel
Affiliate marketing
The other is through rental properties. This involves owning a property and renting it out to tenants.
Now there are 2 types of rental properties:
A Long term rental is where you rent out your property to a tenant for a long period of time. This can range from 30 days to more than 6 months, depending on your agreement.
A Short term rental is where you rent out your property to tenants for less than 30 days. The maximum length of stay for every guest may vary, but it's typically under 30 days...
You can explore all of these business models to see which one would fit right with you.
Personally, I have tried setting up some of these myself and each of them has its own pros and cons. However, there is one business that is particularly close to my heart because it’s what made me a millionaire at 30.
Earning passive income through Airbnb Short-Term Rentals WITHOUT Owning Property.
Airbnb is a home-sharing platform that falls under the short-term rental format.
Basically, it’s an online marketplace where you can list your property so people can book it for their stays.
If you have tried using Airbnb for your travel, you probably know how positively different it can be compared to hotels. Airbnbs offer more amenities, they’re a lot cheaper, and they allow you to experience traveling on a more authentic level.
And here’s the thing, Airbnb is not just a good platform for guests looking for a stay…
It can also be a great business for people looking for passive income.
There are 3 distinct advantages of listing your property on Airbnb:
1. Potential for higher profit
Let’s say you rent a property from an owner for 12 months and your rent is $2,000 per month.
Now let’s say you charge $200 a night. That means that at 10 days, you make $2,000 and you break even, at 20 days, you make $4,000 and you double your rent and at 30 days, you make $6,000 and triple your rent.
Of course, this is an oversimplification because you still need to consider maintenance costs and all the other things. But it is possible. In fact, this is the reason why I switched my long-term rental properties to short-term Airbnb rentals.
2. Less effort to find renters
Another advantage of listing your property on Airbnb is that they do your marketing for you. You don’t have to look for renters and pay for ads. You just simply upload photos of your space on the platform, name your price, and wait for your bookings.
One trade secret is that you need to upload high-quality photos of your place to get your guest’s attention and get more bookings. Simple, yes but it makes a huge difference.
3. Everything can be automated.
The most common mistake that newbie owners make with their listings is not taking advantage of automation. Yes, rental property is already a passive source of income. But maintaining your property’s condition is not.
Rental property management needs to be automated as much as possible if you really want to be able to enjoy its benefits without spending all of your time on it.
With that being said, here are 8 things you can automate and delegate for your Airbnb listing:
Cleaning - Call on your cleaning service providers to take care of this for you.
Cleaning schedule - Talk to your service providers when they should come in to clean.
Maintenance - Delegate your maintenance work to professionals and automate their schedules.
Communications - Assign someone to answer questions on your Airbnb page.
Keyless entry - Upgrade your keys to cards and make it easier for your guests.
Pricing - Delegate your pricing to your trusted managers.
Landscaping - Like cleaning and maintenance, you can also call professionals to take care of your property facade for you.
Replenishable - Have someone replenish the items that guests usually use in your place.
Now I know what you’re thinking - that this is “only for the rich” because not everyone can afford to own properties much less pay to maintain them.
And I don’t blame you. It does require some money to get it going.
But the good news is…
You can actually start an Airbnb rental property business without buying your own properties!
You see, Airbnb is a great passive income source for people who are looking to earn without having to sacrifice all of their time. However, you do need to know the right strategies for you to maximize its potential.
So if you want to learn more about how to start your Airbnb business WITHOUT owning property from scratch, you can download and check out our free training guide here.
Follow me on Instagram, YouTube, Podcast, and visit my website for more info!
Jorge Contreras, Executive Contributor Brainz Magazine
From poverty to a million-dollar business, Jorge Contreras is a real estate investor and coach. He started his real estate journey over 10 years ago, and he launched his Airbnb business 5 years ago. Before that, Jorge was overworked and underpaid. He barely had time to spend with his family, and his business wasn't exactly thriving. Once he got into real estate, he realized the potential, especially with Airbnb and short-term rentals. When he became a millionaire, before the age of 30, he decided to share his knowledge with all the people who have the need to spend more time with their families and less time working. Jorge has already helped over 3000+ people reach their goals with Airbnb.
