I would point out that renting out a condo is not a passive investment; keeping up with tenants, doing cleaning and maintenance, etc. can be a full-time job (maybe less so for a condo than a house, but still). And as we here probably know, maintaining a website is not necessarily passive either, and I would imagine the same is true of a vending machine. These are projects, and at some point they become businesses; not simply "here's my money, make me more".
I would disagree. If you own property in a good location, screen your tenants, it's almost no work. I have several properties and spend less than an hour a month on average in total dealing with any issues.
You can hire a property manager who will take a percent and turn it into almost entirely passive income. This is what I do with my properties, and all I do is approve expenses over a certain level and forward tax docs to my CPA at the beginning of the year.
I pay mine 7% of rent - you can definitely find lower rates if you're dealing with large buildings, but I'm at 7 units total and I really like the guy.
In terms of vetting them, first thing is to check licenses - most states require them to either be a licensed real estate broker or working under one.
I prefer to work with someone who matches me in scale/style - my guy is a broker and runs his own PM service. I deal directly with him. I'd be hesitant to use a larger PM company (even if it might be a bit cheaper) at my scale, because I'm small enough that I'll be a very low priority and will have the most junior employees dealing with my properties. That can be an issue, since they're not necessarily going to have the expertise to do the long-term stuff like knowing when to get the roof inspected. When my wife moved out of her last apartment before we got married, the rep from the PM company refused to do a move-out inspection, since there was still furniture inside that could have been hiding things. Had they charged my wife for anything, we would've taken them to small claims since PMs are required by CA law to inform the tenant of their right to a move out inspection and then to perform one and provide written feedback on request. That's what happens when you're dealing with someone in their early 20s who just passed the real estate agent exam (which I have passed... it is not hard) and doesn't know what they're doing.
Also, look for companies that serve your kind of property - dealing with a property that has an HOA is different than one that doesn't. Dealing with a single family home is different than dealing with a condo. Dealing with a whole apartment building is different than dealing with a single apartment.
And lastly, references. You should be able to get a bunch of them from the PM. Try to get tenant references in addition to owner references - if the PM is ignoring or mishandling tenant issues, the owner probably doesn't know.
Passive income is usually “dramatically less work than a full time job” — e.g. 5 days effort per month. Even paying someone else to do it means you still need to check up on it (and make sure they’re actually doing the work, and doing it competently)
