5 ms·

Why does everybody list books, webapps and mobile apps as passive income? I hope you created them yourself. Then they are not passive income but a product. Like

by erikb 13y ago

Why does everybody list books, webapps and mobile apps as passive income? I hope you created them yourself. Then they are not passive income but a product. Like every product they have a lifetime, then you need a new product. Therefore you actually have a first or second active business and not a passive income. "Passive income" is rent for condos you own, or having shares in your friend's profitable business that yields dividends etc. or did I completely misunderstand the meaning of that word?

lucaspiller 13y ago
I think in the tech circle, passive income is used to refer to something you could ignore for 6 weeks and it would still be earning you money. Most of the 'work' people put in seems to be increasing revenue rather than maintaining it, although yes I agree it isn't completely passive. The same could be said about your condos too though, they'll need to refurbished every few years. Unless you are outsourcing everything, you'll need to do some management of that yourself.
- erikb 13y ago
  Look, I understand how people use the phrase "passive income", but it's really not correct. Like "object" or "unit test" "passive income" is a term with a meaning. It has advantages for you to understand the difference between "unit test" and "regression test". It also has advantages to understand the difference between "active income", "passive income", and "portfolio income". For once you can speak with professionals without misunderstandings, and you can think about a topic in a different way. When you understand what "passive income" means you will see, that you actually really like "passive income" from a tax paying point of view, even if you have to work as hard for it as you would for your "active income" (e.g., salary). The thing is, though, that often if you have to work hard for something that is considered "passive income", then you are probably doing something wrong or it's actually your "active income". [1] http://www.investopedia.com/terms/p/passiveincome.asp http://www.investopedia.com/terms/p/passiveincome.asp [2] http://en.wikipedia.org/wiki/Passive_income http://en.wikipedia.org/wiki/Passive_income
axefrog 13y ago
I think you're missing the obvious: "passive" and "income". Passive income is income you earn passively, and in the context of the opening topic, it generally refers to something you've created yourself (whether the product, the system that sells it, or both), which is earning you money with a relatively low amount of ongoing work.
larrydag 13y ago
I can assure you as my wife and I are starting into the rental business that leasing a residence is not passive.
- silvertonia 13y ago
  If you're renting your first couple places, absolutely not. But at some point you hit a mark where you have a property manager doing all the day-to-day and a few leasing agents filling vacancies and it becomes as passive as you want it to be.
  - baconner 13y ago
    That's true. The same could be said of many of these software products. I think passive income is more about the goal of least ongoing direct effort to highest income than spending zero time.
  - leonroy 13y ago
    In my experience (family business is property rental) I think the point at which you can afford a property manager is pretty far down the line for most people. A cheap property manager or estate agent is generally not worth it - their main goal being to rent the property as quickly as possible to anyone, rather than ensuring rental to a good tenant. Decent property managers cost a fair bit of money and unless you own the property outright or have a very low mortgage it's tough to afford a good manager and have a reasonable passive income from the property as well.
- James_Duval 13y ago
  Another adjective springs to mind, also beginning with "P-A"...
3pt14159 13y ago
That condo has to come down someday my friend.
TeeWEE 13y ago
You do make a point. I worked quite some time to get my app working, and occasionaly i spend time tweaking things. But currently, (and for almost 2 years). I hardly worked on it. And money still flows in.

by erikb 13y ago

lucaspiller 13y ago

I think in the tech circle, passive income is used to refer to something you could ignore for 6 weeks and it would still be earning you money. Most of the 'work' people put in seems to be increasing revenue rather than maintaining it, although yes I agree it isn't completely passive. The same could be said about your condos too though, they'll need to refurbished every few years. Unless you are outsourcing everything, you'll need to do some management of that yourself.

erikb 13y ago
Look, I understand how people use the phrase "passive income", but it's really not correct. Like "object" or "unit test" "passive income" is a term with a meaning. It has advantages for you to understand the difference between "unit test" and "regression test". It also has advantages to understand the difference between "active income", "passive income", and "portfolio income". For once you can speak with professionals without misunderstandings, and you can think about a topic in a different way. When you understand what "passive income" means you will see, that you actually really like "passive income" from a tax paying point of view, even if you have to work as hard for it as you would for your "active income" (e.g., salary). The thing is, though, that often if you have to work hard for something that is considered "passive income", then you are probably doing something wrong or it's actually your "active income". [1] http://www.investopedia.com/terms/p/passiveincome.asp http://www.investopedia.com/terms/p/passiveincome.asp [2] http://en.wikipedia.org/wiki/Passive_income http://en.wikipedia.org/wiki/Passive_income

axefrog 13y ago

I think you're missing the obvious: "passive" and "income". Passive income is income you earn passively, and in the context of the opening topic, it generally refers to something you've created yourself (whether the product, the system that sells it, or both), which is earning you money with a relatively low amount of ongoing work.

larrydag 13y ago

I can assure you as my wife and I are starting into the rental business that leasing a residence is not passive.

silvertonia 13y ago
If you're renting your first couple places, absolutely not. But at some point you hit a mark where you have a property manager doing all the day-to-day and a few leasing agents filling vacancies and it becomes as passive as you want it to be.
- baconner 13y ago
  That's true. The same could be said of many of these software products. I think passive income is more about the goal of least ongoing direct effort to highest income than spending zero time.
- leonroy 13y ago
  In my experience (family business is property rental) I think the point at which you can afford a property manager is pretty far down the line for most people. A cheap property manager or estate agent is generally not worth it - their main goal being to rent the property as quickly as possible to anyone, rather than ensuring rental to a good tenant. Decent property managers cost a fair bit of money and unless you own the property outright or have a very low mortgage it's tough to afford a good manager and have a reasonable passive income from the property as well.
James_Duval 13y ago
Another adjective springs to mind, also beginning with "P-A"...

3pt14159 13y ago

That condo has to come down someday my friend.

TeeWEE 13y ago

You do make a point. I worked quite some time to get my app working, and occasionaly i spend time tweaking things. But currently, (and for almost 2 years). I hardly worked on it. And money still flows in.