Your Primary Residence As Passive Income
When it comes to real estate investing and passive income there are many different ways that you can make money. The most common methods often involve owning a rental property and flipping properties. What if you don’t want to take these types of risks? What if you don’t want to tie up a heavy amount of your capital this way? What if you want to live in a home and then eventually sell it for a profit?
Can your primary residence be passive income? I don’t think so.
Why can’t your primary residence be passive income?
Too much work involved.
Creating passive income usually involves investing your time ahead of time and then receiving residual income. There’s too much work involved with your primary residence to ever consider it passive income. Think about all of the work that you do on your home on a weekly basis. Maintaining a home is no easy task. It also gets really expensive with all of the fees and expenses that go along with keeping your home running.
No guarantee in home appreciation over time.
There are those that get lucky and their home value appreciates so much over time that when they do sell the home they end up cashing in some good money. This is rarely the case. As the crash of late-2008 has taught us, there’s no guarantee that your home’s value will go up. Your home value won’t always go up. This means that you could actually lose money over time on your primary residence if you choose to sell it during a down period.
A heavy capital investment.
There’s a heavy capital investment when it comes to your primary residence. You have to tie up a serious portion of your savings in this home. You have to spend money literally all of the time on your home. Between a mortgage downpayment, mortgage payments, and the costs of moving, you’ll be tying up a majority of your savings in this home. Is that worth it to you?
Passive income is inherently about working hard now so that you can reap the benefits in the future. With your primary residence the work never ends. This is why I wouldn’t consider your primary residence as being passive income.
For those of you that enjoy the topic of real estate, we have a new product hitting the market real shortly. Stay tuned.
(photo credit: momkay)
