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Creating a consistent source of income through passive income, or making money without direct investment, is highly recommended. Obviously, they may require some early financial or time commitment, but once you get going, you can usually kick back and relax.
For You: 5 Unusual Ways To Make Extra Money (That Actually Work)
Barbara Corcoran’s Top 5 Ideas for Passive Income
Real Estate Investing
In the actual “rags to riches” story, Corcoran made a name for himself in the real estate industry by starting The Corcoran Group in New York City.
According to her website, Corcoran quit her job as a waitress at age 20 to start a small real estate company in New York City that became one of the largest and most recognizable brands in the brokerage industry. She did this by borrowing $1,000. Her prosperity came from focusing on real estate ventures.
Growing Through Leverage
Mint claims that one tool is crucial to Corcoran: the importance of leverage. Stated differently, this is a tactic that involves borrowing to buy more property and paying off the mortgage with rental income. Profits can then be reinvested.
For example, on an episode of the BiggerPockets Real Estate Podcast, Corcoran discussed two other “golden” real estate investment guidelines: having a 20% down payment on an investment property and paying renters to pay the mortgage.
“That’s always been my golden rule,” she declared. Make a 20% down payment for the house. It’s always been my formula because they can’t use 10% like they used to. I repeated that pattern over and over while verifying that my tenant had paid my mortgage. In that sense, it is quite simple.
Best-selling author of “Rich Dad Poor Dad,” Robert Kiyosaki admits to using debt to build further wealth. Put another way, get more money by using money. For example, borrowing to buy real estate is an investment that increases in value over time.
House Hacking
According to Mint, Corcoran uses a real estate tactic known as “house hacking” to generate passive income.
Renting out other apartments in your home while living in one of them is known as “house hacking,” which enables you to generate rental income that can help pay off your mortgage. This is an increasingly popular trick.
Emerging Areas
Corcoran also suggests focusing on housing in emerging communities with room to grow. According to Mint, using this strategy you can benefit from increasing real estate values over time. You can then use your earnings to buy other houses.
She also discussed it on the BiggerPockets Real Estate Podcast, claiming that repeating “the same little dance step over and over again” is her “crazy formula for buying real estate” that has helped her succeed. She actually bought consistently in developing areas. She claimed to have lived in Brooklyn, for example, “long before Brooklyn was bought from Manhattan.”
Diversify Investments Beyond Real Estate
Last but not least, as Mint points out, Corcoran has ventured beyond real estate, highlighting the need to take measured chances, even if they seem unusual to others.
Peer-to-peer lending, high-yield savings accounts, dividend-paying equities and other investment options can be explored to diversify sources of passive income beyond real estate. By buying dividend stocks you can get consistent income from business earnings. You can lend money to people or small businesses in exchange for interest payments through a peer-to-peer lending network.
Plus, high-yield savings accounts and certificates of deposit (CDs) provide safe, low-risk options for growing your savings with higher interest rates than typical savings accounts. With these choices, you can build a diversified, balanced portfolio that generates passive income.
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