Passive Income Question. How do I contract?

[ee3451]

I read White Coat Investor's article about passive income, and I'm intrigued. I've an idea and I want to know your input.

My dad owns an entire auto shop. His employee is interested in taking over his auto shop when my dad retires. How do I establish a corporation that when my dad retires, he and I receive a monthly income from the auto shop?

If my question is posted in the wrong forum, please let me know. Thank you.

[Passive Income MD]

You said the magic words and my ear started ringing...

If neither you nor your father want to be involved in the day to day running of the shop at some point, in my opinion, the best way is to do a clean transfer through sale. No one likes the idea of paying dividends in perpetuity and there's no way you're going to be able to verify if you're getting paid out correctly by the new owner.

You can take the proceeds of the sale and buy some cash flowing real estate, REIT, dividend stock that will allow you to receive a monthly/quarterly check.

[FutureDoc]

You could also take part of the sale as lump sum, then do part as seller financing, say a 5-10 year loan at a decent interest rate.  Those payments could provide some steady income in addition to the cash.

 

But otherwise, like PI MD above, take the procedes from the sale and buy assets that produce cash flow.  Remember that in this current environment you aren't going to get a high rate of return without a lot of risk, which might be a bad idea for your dad if he is retiring.