Property returns are one of the best ways to generate passive income. Building wealth through property is the most traditional and “respected” form of generating wealth over a long period of time. Property however requires more work and also a significant amount of money to become invested in, however if you’re wanting to really add to your passive income stream, property is the ticket.

There are two means of generating passive income through property. One is a little less passive and one is a more reliable stream of passive income. The first is buying and holding property. It may be land, it may be a house, it may be the house you’re living in right now! Many times land can appreciate at $5000 – $10,000 dollars a year. Thats anywhere from $400-$1000 of passive income a month. This seems great but don’t forget to factor in property tax you must pay, maintenance, repairs, bills and fees incurred from the property. Then the fees associated with selling the property.

Another great form of passive income attributed to owning property and real estate is renting. Owning property and renting is a great way to generate passive income. Make sure however that the renter is covering your full cost and then some. Don’t forget to include any property tax you must pay, homeowners association fees, insurance, maintenance and bills. You don’t want your passive income to turn into negative income.

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Also keep in mind that many times owning a rental property can become less passive income and more active income, especially when the property is vacant. If you’re constantly dealing with realtors, fees, months without anyone in the property, and bills it becomes more of a frustration. If this is the case, it might be a good idea to sell the property off if your primary goal is passive wealth.

Property is one of the most profitable forms of passive income, but can also become one of the most risky, expensive or even active forms of income, leaving you with less time and more frustration. Keep you’re positive cash flow model in mind and factor in the amount of work for the amount of return. Is making a $200 profit a month worth dealing with 25 hours of frustration a month? No! That’s why you want to create passive income, to generate wealth outside of your 9-5.