re: How do I build passive income?

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If you are $2M in capital, then put it in the stock market and collect quarterly dividends. Voila, passive income. The struggle is that you need large enough capital investment to get the scale on 3-4% dividends that the absolute dollars you receive each quarter are meaningful.

Real estate is the other but less passive with higher risk. However, it doesn't require as much capital and you can use leverage to your advantage.

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This is bass ackwards. Real estate generally has a higher ROI than stocks, and the real estate market isn't near as much risk.

My wife makes 3 to 5% on her stocks. I make 12 to 18% on my rentals. The key is to know the market before you invest, purchase when it's a buyer's market, not a seller's market. Personally, I never buy a rental that I would not live in were I to need to, which isn't the same as would I want to live there. Basically, don't buy something in a crappy neighborhood or is in such bad shape that you wouldn't live there. Kind of related is don't buy a place that needs so many repairs that you would have more in it than you could recoup in a fairly quick sale.