One of the most time tested ways to make passive income is through investing in real estate. From the dawn of private property ownership, renting property to others for use as a home, place of business or a farm has been a very good way to generate consistent income that does not involve trading time for dollars.
The US mortgage crisis and resulting fall out in the real estate market represents one of the largest transfers of wealth from weak hands to stronger or more enterprising hands in American history. Some parts of the country represent better opportunities than others though.
Under normal real estate market conditions market forces (buyers, sellers and renters) push real estate prices high enough that it is cheaper on a cash out of pocket basis to rent than to buy. Whenever it becomes cheaper to buy than rent the renters move in to the market and start buying homes, forcing the prices up. Investors interested in single unit housing end up subsidizing their property mortgage and holding costs, at least for the first few years. Kind of the opposite of passive income as you have to not only put cash down, but feed the property additional cash every month.
In the current real estate market, areas such as the Gulf Coast of Alabama actually have single family homes you can buy and get positive cashflow. Taking a look at gulf coast real estate on the beach shows deals like this: