Anybody who’s successful at any level of real estate investing has come to understand the special relationship between hard money lenders, rehabbers, and wholesalers. Some experts call this the “symbiotic trinity” of real estate investing as all three of these groups help and need each other to be successful. Interestingly, although they need each other equally, these three categories also represent three different levels of real estate investing.

If you have no money and sub par credit and want to get started in real estate investing you will start out as a wholesaler. Wholesaling takes a lot of time and effort, and is the least passive of these three types of real estate investment. Smart real estate investors typically buy house for 70% of the home’s after repair value. A wholesaler makes money by finding houses that are priced below 70% of their after repair values. Since they don’t have any money to buy the property themselves they need to have a relationship with rehabbers who are willing to buy the contract from them for a sum of money.

It may take a few deals, but eventually these wholesalers will accumulate enough money to move to the next level- rehabbing (typically they’ll need about $5,00o). Once they do this they keep doing what they’ve been doing- looking for houses. But now they have a little bit of a bigger selection- since they can now buy houses for 70% of the after repair value. They’ll use the money they’ve saved as a down payment for a loan from a hard money lender. Then they’ll fix the property up (rehab it) to sell or keep for passive income.

Once a rehabber has made enough money from these deals (let’s say $100,000) he can either move on to multifamily real estate investing or hard money lending. Many real estate investors like investing so much they keep doing it- moving on to bigger and bigger projects. But many decide to become hard money lenders- lending out money to rehabbers at high interest rates and pocketing the monthly payments. Hard money lending is typically the most lucrative and safe of the passive investments.

Creating a steady stream of income is a goal that each of us set each day when we head to work. In general, you go to work, earn a paycheck and return to repeat the process each day. This form of income is called a linear income. It is a type of earning that could, at any time, stop. If your company closes or you become to ill to work you can no longer earn a living. This is why most people search for a passive income that will continue to produce profits regardless of any situation.

A passive income opportunity provides a person with a way to generate income continually after the initial investment of time and money. This can be accomplished in many ways. A rental property would be considered a passive income. MLM programs and product creation are also a way to create a streaming income for yourself.

When you consider this type of income think of something as simple as a rose bush.

You purchase a rose bush at the home and garden center. (Your monetary investment) You take the bush home and plant it in a spot that you have carefully prepared. (Your investment of time) Each year, from that time forward, the rose bush produces a bountiful crop of flowers. This is what creating a passive or residual income stream does for your finances.

When you look for this type of opportunity make sure that the product or service is something that you believe in. This will help you initially lay the foundations for success. Like the rose bush scenario, you would not cultivate a weed so carefully because it is not something you want. This is also true with a business opportunity. If you are not satisfied with it you will not lay the groundwork to make it blossom.

A residual income can make all the difference in the world to your financial life. Taking the time to create this type of income for yourself is worth the effort if you wish to be financially secure for the rest of your life.