Building Passive Income


Many of us have heard about passive income but are guilty of not knowing exactly what it means, or how we can build passive income. This article aims to cover different types of income and dive a little deeper into passive income through property.

First of all, we need to address what passive income actually means. Passive income is income earned through an asset that requires minimal input. Think of the concept of earning money while you sleep. The asset will produce an income for you whether you spend time on it or not. Passive income can come from one asset or many assets, with wealthy individuals normally having multiple streams of passive income.

There are many different ways to create passive income. I have compiled a short list of examples of passive income-producing assets:

  • Network marketing – products sold through word of mouth
  • Stock investment or trading – short term or long term income-producing asset through the stock market
  • Software – creating software, for example, an app that produces you income when it is bought or used on-going
  • Education – creating income through publishing a book, producing online courses etc
  • Affiliate marketing – creating income through promoting other peoples products that are sold by you
  • Franchising – payment of royalties or passive income by allowing an individual or party to operate their own business using your branding, systems and proven business model
  • Drop-shipping – generating income through advertising and selling a product that you don’t stock. You act as a middle person between the manufacturer and the purchaser and do not hold any stock or complete the shipping. 

Last, but by no means least, is property. Property is one of the oldest methods to generate passive income. Income can be gained passively through property when the rental income from the property covers all the bills and costs associated with renting the property and leaves you with money left over.

An example of monthly income from a typical property deal would include:

(Property purchase price £130,000 – a mortgage of 25% loan to value and interest rate of 4%)

Rent £800

Less expenses: Mortgage payment £325, Letting agent fee £80, Insurance £30

NET RETURN: per calendar month £365 

We can see from this example property deal how passive income can be built through property. Per year, the example above would equate to £4,380 in passive income. We always encourage our clients to think about what passive income could do for them, to build towards a target passive income figure. Whether it’s for holidays, expensive hobbies, or to tuck away for a rainy day fund, property is an excellent investment vehicle.

Whether you have thought about getting into property but haven’t taken action, or have a couple of properties already but would like to continue to grow your portfolio, we would love to hear from you. We can take all the hassle away from property investing, managing the entire process on your behalf.

Click the button below to book a call with me, to see how we can help you build passive income through property.