One of the things I love about the real estate business is the ability to watch and help people create passive income. Passive income, or residual income, is a form of income that comes from sources such as investments or assets that you own. Passive income, by definition, is income that is unearned. The great thing about passive real estate income is that your assets that produce that income can appreciate in value.

So if you choose an asset class such as real estate for an investment, you have the opportunity to create passive income, collect tax benefits, and also reap the benefits of future appreciation.

There are many different opportunities to break into the real estate field... one of them being becoming a Realtor. Getting involved with selling real estate can give you an opportunity to work with other investors and "learn the ropes" while making money selling to save for investments.

In addition to selling real estate, there are some companies that allow you to create a second income stream. Exit Realty, my company, allows you to create a passive income stream from introducing new individuals into the company. This is not MLM, but this is a single level residual that allows you to collect bonuses paid from Exit Realty Internation. For more info, please visit my Exit Realty Blog.

This is an opportunity to create a passive income by adding leverage to your sales business... and in the meantime you can begin to invest your profits back into investment real estate to create even more passive income. This is one of the topics that I will expand on in future posts.

We've seen 5 consecutive months of increasing home sales and we are approaching the point where the year over year decline has been the smallest in three years. Many other indicators suggest that the economy is finally emerging from one of the deepest recessions in decades. So what does that mean for the real estate market?

Well, it depends on where you are located. If you live in certain areas that have been hit the hardest, you still have to deal with excess inventory and foreclosures that seem never ending. This will keep the supply of homes on the market high which will continue to challenge the prices. However, if you can find property that provides good cash flow and you have a longer time horizon, you will be able to capitalize on many of these opportunites.

I have a friend who just purchases two single family homes in Florida for $55,000. These properties sold for nearly $200,000 in 2005! They are only a few years old and he rents them both for $850 per month. If he put down 20% on both ($11,000 each), his mortgage would be around $400 per month including taxes and insurance. That means he is making around $400 per month on each property (give or take depending on expenses). That is around $4800 per year, and $9600 total per year from both properties from a $22,000 investment. This represents a $43% cash on cash return (the return on his initial $22,000 investment). By the way, this is just the cash on cash return he receives. His properties could stay valued at $55,000 and he still receives that huge cash return every year!

Now, his properties will likely appreciate modestly over time. So let's say that the market will average a modest 3% return (pretty safe bet considering inflation and the fact that his area has gone down dramatically in the last two years). Adding the leverage he gets from using the banks money for 80% of the purchase, the 3% apprecation of the property means that his 20% investment appreciates by 15%. Add that to the 43% and you get a return of 58%! Incredible returns from a modest pair of single family homes. This does not include the tax benefits my friend will receive. (And they are quite large because he has a very high income from being a Realtor). I will go into those benefits on a different post.

Suffice it to say, even in the worst areas, it looks like it is shaping up to be an outstanding time to invest in real estate. Where I live in North Carolina, it looks like a great time as well because here the market fundamentals are even stronger and while the prices may not look as cheap compared to other locations, the economy and the job growth is very strong and growing, which provides for a great opportunity to invest in real estate.

So go out there and start making some money!

Thanks for checking out my new passive income blog. Be sure to check out my local Raleigh real estate blog at http://www.johnhuberrealestate.com/ if you'd like to search for property. This blog is going to focus on ideas and methods for creating passive income from real estate and businesses. One of my favorite ways to create passive income is through real estate because of its tax benefits, appreciation potential over time, and debt paydown provided by the tenants. Apartment buildings can be extremely profitable, and much of this blog will be devoted to topics pertaining to commercial real estate. I also will discuss residential real estate as that is the field where I work currently. I am interested in the many different possibilities that exist to create passive income and I am a big believer in multiple streams of income to create a strong balance sheet and income statement. My personal goal is to use the different streams of income I have to invest in real estate and stocks. Over time, most of the income I receive will likely get poured right back into real estate because I truly think it is the best investment vehicle available. However, I'd love to hear the different ideas you might have on investing and passive income.