By Younas Chaudhary

Passive income is money you make without too much effort. It is commonly called “mailbox money” and you do not need to monitor it on a daily basis. In my case, passive income helped me infuse cash into growing my oil and gas and real-estate businesses.

In the early stages of my oil and gas business in Wichita, Kansas, I used to have conversations with my physician friends about various ways to invest and make money. They gave me their work examples saying that they if they had 20 patient visits a day, they would break even and any additional patient visit would yield a profit to their medical practice. Listening to their conversation, I realized that they did not have a steady  stream of cash flow and they relied entirely on income from their patient visits.

I thought one way to make passive money from my oil and gas business would be owning the minerals under lands and leasing them to the oil and gas companies or developing them myself by one of my oil companies. I began buying mineral lands and started leasing them to oil companies. By leasing them, I received cash bonuses at lease signing and the oil companies would sometimes drill on these lands. During the initial years, leasing bonuses were small amounts and the royalty income came in small checks. Slowly the income grew, especially after the introduction of the horizontal well drilling in places like the Permian Basin.

I rarely sold any of my lands and leaseholds. I was known in the office as the biggest hoarder who ever lived and people would make fun of me for holding on to vast tracts of leases in different states, some of which lost good amounts of money in the early years due to higher costs.

The shale boom started with the horizontal well drilling and new drilling technology. Oil companies began scouting for properties for new drilling and higher production. Luckily, some of my properties were located in the sweet spots of these energy majors. I had held onto these properties for the past few decades and they grew in value. This helped me generate a good amount of passive income.

Passive income has helped me invest more aggressively in my oil wells production and real estate companies. I channeled this money into innovative projects that are providing future growth and additional current income.

Here are a few ways by which you can easily generate steady passive income:

1. Purchase homes in good locations, especially those on larger size lots. You can live in it or rent it to generate good monthly cashflow.
2. Purchase land in the up-and-coming areas with good traffic flow, especially corner lots. The land will increase in value over time. Do not look at the land purchases as short-term investment.
3. Investing in blue chip stocks and ETF especially those who pay good dividends is a good way to generate passive income. Make sure you have the financial capacity and tenacity to be patient and think long-term.
4. Purchase investment properties by owner finance where the current owner will carry loans. Take a loan from the seller and pay down their mortgage and eventually pay off the mortgage. You can cover the mortgage payments by renting the property. Blessings.

Disclaimer

The views, thoughts, and opinions expressed in this article are my own and do not represent the opinions of any entity with which I have been, am now, or will be affiliated. Further, I make no warranty regarding the accuracy or effectiveness of my recommendations, and readers are advised to consult other advisors as well as their own judgments in making business decisions.

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