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Ways to Build Residual Income

Original post by Sherrie Scott of Demand Media

Residual income is money earned over time from work performed once. People who receive residual income create products, write songs or books or investment in a security or business. The investor continues to receive payment for his efforts long after the work is done. There are several ways to build residual income if you are willing to put the time and effort into an income producing project.

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Real Estate

Real estate investing is a lucrative way to build residual income. You can earn residual income in real estate investing by purchasing a property and renting it to a tenant. If structured properly, the monthly rents paid by the tenant can cover the property’s mortgage and fees with money left over as income for the investor. When purchasing real estate as an investment, it is important to locate a property where rent payments will cover more than the cost of owning the property. For example, if the mortgage on the property is $750 per month, the property should rent for more. The exact amount is relative to what similar properties rent for in the neighborhood where the rental is located.

Securities Investing

Investing in securities is an effective way to build residual income. Securities such as stocks, bonds and mutual funds pay periodic payments you can receive as income. The security pays a dividend or interest payment based on its performance in the stock market. For example, individuals who invest in a stock can receive a monthly dividend payment if the stock increases in value. The income earned from securities investing is residual because you only need to make a one time investment and no further action is required. It is important to mention, however, that securities’ investing is not without risk. There is a possibility that you could lose money investing in the stock market. Take the time to research the type of security before investing to make sure the amount of risk you assume is within your comfort level.

Publish a Book

You can earn residual income by writing a book and receiving royalty payments when the public purchases your work. If you have an idea but lack writing skills, you can hire a ghost writer to help you put your idea on paper. After your initial effort, you continue to passively receive payment every time someone purchases your book. Once your book is published, you can earn a percentage of the price of each book you sell. For example, if your book’s net price is $5.25, you can earn 10 percent or more for each book sold. The exact percentage you earn depends on what you negotiate with the publisher of your book.

Sell Products Online

An effective way to build residual income is to sell products over the Internet. Many consumers go to the Internet to purchase the products and services they need. You can start an Internet business with a website, hosting and an idea for the products you want to sell. Each time a consumer visits your website and makes a purchase, you get paid. You can increase your income opportunity by marketing your website and/or products online. Social media and networking websites are an effective way to get the word out about your website and increase traffic and sales.


                   

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About the Author

Sherrie Scott is a freelance writer in Las Vegas with articles appearing on various websites. She studied political science at Arizona State University and her education has inspired her to write with integrity and seek precision in all that she does.


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