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Passive Residual Income is fast becoming the buzz phrase of the 21st Century. By definition this type of cash flow is income that comes in month after month, without you having to work for it. There is however a difference between residual income, passive income and passive residual income. A million dollars in the bank produces passive income in the form of interest for as long as you leave the money there. Once you withdraw it the income stops. Royalties from a book or a record create the same and fall under the same category as well but the amounts increase or decrease with the volume of books sold.

If you are involved with an MLM Company and are receiving a monthly check as people below you are purchasing products month after month this is a form of residual income however you may have had to work very hard for years to create a cash flow that keeps paying month after month. If this was the case you will have succeeded in creating an ongoing income stream but it was far from passive while you were creating it.

True passive residual income is derived from a source that does not require ANY input or effort on your behalf to start, receiving ongoing income. There are only a few programs that truly qualify under this definition. Most MLM Business Opportunities will not allow people to create lasting residual income because the models are not based on real sales. They are generally based on rewarding members for bringing in or recruiting other members. Very few MLM Programs provide products that can be retailed to the end consumer at a fair price that will also allow the distributor to pocket a retail commission. Since this is the case distributors tend to jump from program to program if they are not making any real money within a short period of time, usually around 90 days. This attrition is what causes the ambitious entrepreneur to have sporatic spikes and dips in the residual income checks they attempt to generate through MLM.

In recent years there have been a number of programs that taught passive residual income without sponsoring or recruiting but what they fail to mention is that the ability to generate those incomes is solely dependent upon happen stance or chance! They are normally based around some type of forced matrix compensation plan and have a no sponsoring requirement that will allow you to get paid off a certain number of levels and distributors without having to recruit anyone. The problem is if you are not recruiting anyone and your sponsor is not recruiting anyone and so on then no one will ever get into your group and you will NOT make any money!

There are three methods you may want to consider when investigating passive residual income opportunities.

1) Cooperative Marketing with this model you are not depending upon a matrix type program to create your passive income. You are basically pooling your resources with the company resources to promote products through the media. You purchase the lifetime rights to customers who purchase products as a result of the marketing efforts. This provides two benefits 1) Your cost to purchase the customers is a tax write off. 2) You can acquire all the customers you want at a fixed cost.

2) Passive Residual Income through fixed profit sharing. This type of model is unique and only offered by one company to date. You basically make a purchase of a product that is worth three times what you pay for it. As a bonus the company allows you to participate in a share of the profits in a fixed schedule over an 18 month period until you receive back 300% more than what you spent on the product. In addition this model actually pays you monthly referral commissions if you choose to share it with others without requiring you or anyone else to pay any monthly fees!

3) High Yield Investment opportunities that have a track record of at least 2 years or more and pay an ongoing monthly interest payment. While it is difficult to separate the scams from the genuine programs one of the easiest ways to minimize your risk is to determine the track record of the venture you are intending to participate in. The longer a program has been around is a good indication of it’s legitimacy but I still would not recommend investing the rent money.

In regards to generating passive residual income in MLM the goal is to build an organization large enough that the commissions you will receive will provide you with enough money to not only cover your product purchase but to actually pay you more money than you are spending month after month.

The concept is right on the money but after close scrutiny of most mlm programs their policies and requirements actually prevent people from generating a passive income.

The cold hard truth about generating passive residual income is you will generally have to work for it!

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Source by Owen Brown