By Dave Lindahl

It is not big secret that there is one reason and one reason only that people become real estate investors, and that is because they want to get rich. Extremely rich. Fabulously wealthy. They want to be able to ride in limousines and drink champaign at giant parties with all of the right people. In short, they want t o live the lifestyle that they’ve always dreamed of.

Of course, in order to become extremely wealthy in the real estate business it is necessary first to purchase a property, then to make a profit on it. Sure everyone says that flipping properties is the way to go to make a profit in the real estate business. You buy a home for pennies on the dollar, fix it up and resell it for thousands more than you paid for it. You then take that money and reinvest in your next property, repeating the process over and over again.

Yes, that will make you some money, but it will take years before the money you make off of the resale of these properties accumulates to the kind of money you are going to need to live in the manner of which you have dreamed. Not to mention the fact that this is an awful lot of work. Surely the men and women who have become multi-millionaires in the real estate business know something you don’t; it is difficult to imagine any of them ever working so hard for so little!

If these are your thoughts then you would be absolutely right. They do know something that you don’t, and that something is that trying to flip properties is not going to allow you to become fabulously wealthy. While it will serve to earn you a comfortable income it will also hasten your way to an ulcer and a heart attack, particularly when the market takes one of its inevitable dips and you find yourself holding the bag on a property that isn’t even worth what you paid for it. No, the secret to success in the real estate world is passive income.

What is passive income? This is money that you make from your investments without having to do a thing. Money for nothing? Unheard of in today’s society, yet very true when it comes to real estate investments. Consider this for a moment. Say that instead of buying a single-family home and reselling it you decide to purchase a multi-family home and turn it into an apartment complex. This means that every month the tenants in these apartments are going to be paying rent to you.

Now, consider for a moment what you are going to do with the money they pay you every month. Yes, you are going to be responsible for the cost of the upkeep on your building, as well as the cost of the mortgage for its purchase (when you are first getting your feet wet in the real estate industry you are going to find yourself having to beg, borrow and steal for the money to purchase your properties; in time this will no longer be the case, and you will not have the responsibility of the mortgage payment looming over your shoulder) but these amounts are not going to consume all of your income, and you are soon going to be making a profit. The profit made from these tenants are what is going to make you a millionaire.