Real Estate Investing Basics

The Truth About Passive Income: Is it Ever REALLY “Passive”?

Expertise: Landlording & Rental Properties, Real Estate Investing Basics, Personal Development, Business Management
32 Articles Written

What is passive income? It's very important to find the answer to this question because there are many myths attached to it. Many real estate gurus have taught their students that "passive income" means there will be no work involved. They won't have to get their hands dirty, and the profit will just magically and consistently come in every month without having to lift a finger.

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I would like to dismiss this myth by telling you that every successful investor in any industry will always be doing certain amount of work. It might involve overseeing of the investment portfolio, measuring profits or return on investment, or making adjustments.

In case of real estate investment, "passive" could be termed as something where you don't necessarily have to do things like rehabbing the property or managing tenants. Services like turnkey investment give leverage to those investors who are looking for generating passive income without quitting their day jobs.

The thing is there is tremendous value in working with a company that has already dealt with most of the issues. They are experienced. They have been investors themselves and they are managing investment properties on a daily basis. You are actually paying for their experience, so you don’t make mistakes.

Related: Why Investing in Garages Is an Ideal Source of Passive Income

Turnkey Real Estate Companies

With turnkey, what actually happens is that you hire a turnkey company who have investment properties for sale. You check the properties, select the one that suits your investment portfolio and buy it. Every month, you get your monthly check from the rent after the deduction of turnkey company’s fees. This is the price you pay for highly-skilled professional management, which saves a lot of your time.

Some of the tasks that a turnkey company performs are:

  • Handling phone calls, including late night emergency calls.
  • Finding good tenants, meeting them, showing the properties, answering their questions and renting them out.
  • Collecting rent from tenants every month on your behalf and disbursing funds to your bank account. If the tenant fails to pay rent on time, collecting the payment, including late fees.
  • Providing you with an itemized statement showing income and expenses related to your turnkey investment property.
  • Taking work orders, contacting contractors and getting repairs done.
  • Working with county and other government entities.
  • In-house property maintenance services.
  • Working with housing authority, lawyers, contractors, dealers, agents, cable guys, phone companies, gas and other utilities.
  • Arranging home inspections.
  • Marketing/Promotions

Related: Don’t Believe Passive Income Is Awesome? Check Out the Diary of My Week!


The fact is that generating passive income is possible if you can find the right people to support you and for that, you need to do some work. You will have to get out there, meet people, look at their portfolios and once you are satisfied, you can rely upon them. Just make sure that you are doing your part right. It might not require your time on a daily basis but you’ll need to talk to your property managers on a weekly or biweekly basis.

Please share your thoughts about passive income. Do you think it’s possible?

Leave your comments below!

Mark Ainley is an investor, managing broker, and property manager with almost two decades of experience in real estate. Mark found his way into real estate by purchasing and flipping condominiums p...
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    Replied almost 5 years ago
    I welcome your ideas
    Replied over 4 years ago
    I like the idea of turnkey companies that handle the work on your behalf but I was wondering, are these different from “property management” companies, or are turnkey services a comprehensive form of property management? Also you mentioned they provide itemized statements of income and expenses, do they provide tax forms and documents at the appropriate time of year as well?
    Julie Rogers from North Lauderdale, Florida
    Replied over 3 years ago
    I thought turnkey was just the entity that sold you the property, and you have the option to use them as property managers if you want. It is hard enough to find a cash flowing property, much less, paying someone to find a property, rehab, then sell it to you at a profit. I guess turn key could be any property that you buy, and can put the for rent sign up the day of the closing. Not my cup of tea. I need the, you make your money when you buy, properties You must be in the turn key business. Bad day today. Then my reading bigger pockets articles. It started with some guy thinking I was really interested in why he deserves a Lamborghini. then the next article was some guy bragging about how much money he makes, so real estate investing is so easy and lastly, awh I don’t remember . I really have enjoyed bigger pockets, but it is very difficult to find properties that cash flow and they are getting harder to find, and everybody and their best friends are getting into the rehabbing gig. That Ben guy says he only buys one property a year, so with that info, I will be happy if I can get one a year. Of course his properties are complexes and mine are sf. I am gong to try and get 2 this year, but will be happy with one. To finish my rambling, I really want to thank all the people that write the articles, no matter what their subject matter, I pick up a little something from all the articles. I appreciate them using their valuable time to mentor me.