Passive income — making money without active involvement — is a great way to generate steady income streams and make easy money. Of course, these may require some initial time or monetary investments, but once you start with them, you generally can sit back and relax.
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Real estate mogul and financial expert Barbara Corcoran has a few ideas about which ones are the best.
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Real Estate Investing
Corcoran established herself as a real estate mogul, founding her company The Corcoran Group in New York City in a true “rags to riches” story.
In her 20s, Corcoran borrowed $1,000 and quit her job as a waitress to start a small real estate company in New York City, which became the largest and best-known brand in the brokerage business, per her website. Her focus on property investments made her successful.
Growing Through Leverage
According to Mint, for Corcoran, one tool is key: the importance of using leverage. In other words, this involves borrowing money to purchase additional properties and using rental income to cover the mortgage. In turn, the profits can be reinvested.
For instance, in an episode of the BiggerPockets Real Estate Podcast, Corcoran explained two additional “golden” real estate investing rules — putting down 20% on an investment property and having tenants of that property pay for the mortgage.
“That has always been my golden rule,” she said. “Buy a property with 20% down. [That] has always been my formula because they used to do with 10%, but it’s not possible anymore. I repeated that formula again and again and again and then made sure the tenant had paid my mortgage. It’s pretty easy that way.”
This is also a method used by the bestselling author of “Rich Dad Poor Dad” Robert Kiyosaki, who said he uses debt to create more wealth. In other words, leveraging money to make more money.
For instance, using loans to acquire real estate, investments that appreciate over time.
House Hacking
For Corcoran, another real estate strategy to derive passive income is the so-called “house hacking,” according to Mint.
House hacking is when you live in one of the multiple units of your property and rent out the others, which allows you to generate rental income that can offset your mortgage payments. It’s a strategy that’s on the rise.
Emerging Areas
Another strategy Corcoran favors is to focus on properties in developing neighborhoods with growth potential. This method can allow you to capitalize on increasing property values over time, according to Mint. In turn, you can reinvest your profits in additional properties.
This is also something she mentioned on the BiggerPockets Real Estate Podcast, saying that her “wacky formula for buying real estate” which enabled her to do well, was to repeat “the same little dance step again and again.” Indeed, she always bought in up-and-coming areas. For instance, she said she was in Brooklyn “long before anybody was buying Brooklyn from Manhattan.”
Diversify Investments Beyond Real Estate
Finally, as Mint noted, Corcoran has diversified beyond real estate ventures, by emphasizing the value of taking calculated risks, even if they may seem unconventional to others.
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This article originally appeared on GOBankingRates.com: Barbara Corcoran’s 5 Best Passive Income Ideas