I know that some of you may find this hard to believe so bear with me here while I explain some of the numbers.  I will make a few assumptions along the way, but I can assure you that they are based upon reality.  I currently own some single family homes as rentals as well as an interest in a small commercial property.

We have all heard the expression that time is money, and it is true.  Most everyday, millions of people trade their time to perform some task in exchange for money.  That money is then used to purchase those things which one chooses not to procure for himself because he has used his time for other purposes.  Money is simply a medium of exchange that makes bartering a whole lot easier.  So, I would like to examine what two different individuals choose to do with their time and what the result over several years might be.

Assume that we have two young individuals who want to invest with the goal of acquiring passive income several years into the future.  These individuals decide to invest one year of their time acquiring the assets that will provide that passive income.  One of them, let’s call him Rob, wants to invest in real estate and has his eyes set on a single family home.  He plans on working for one year at a job making $10/hr and using that money for a 20% down payment on a $100,000 home which he will rent out after taking out a 15 year mortgage.  The rent just covers the mortgage payment and rent increases will cover increasing taxes and insurance costs.  Essentially, he will have no out of pocket expenses and after 15 years will own the house free and clear.

Olivia, on the other hand, wishes to work for the year building online income opportunities.  She doesn’t have any money to spend but plans on developing an online portfolio through revenue sharing sites, like HubPages, Squidoo, and eHow.  She takes an average of 3 hours to develop a hub and an hour each on a lens and eHow article.  She spends the other hour of an 8 hour day on link building and driving traffic to her articles.  She works 200 days over the year just like Rob.  At the end of the year, she has 400 hubs, 200 lenses and 200 eHow articles.  Let’s assume that she is able to make $1.25 per article per month so she is making $1000 per month in income over the next 15 years.

Rob owns his house free and clear. We have assumed that he paid nothing else out of pocket and that he had minimal vacancies and no major repairs. Over the next 10 years, he is able to rent the house for $1000 per month. At the end of that time, he sells the house for $125,000. His net profit ends up being the $12,000 per year for 10 years rental receipts plus the sale of the house or $270,000 total.

Olivia has made $180,000 during the 15 years that Rob was paying off the house and an additional $120,000 during the 10 years following to total $300,000. We have assumed that the income from the articles has been fairly constant and that the business model of the sites doesn’t change during a 25 year period. Obviously, the assumptions for both models are just that.

The main point in this exercise has been to illustrate the point that with some initial hard work, it is possible to create a viable alternative to real estate investing without any monetary investment. There are many individuals who are doing this, and I plan to detail my journey on my new blog.