Author Archives: livingrichcheaply@gmail.com

My Long Distance AirBnB Investment Disaster

AirBnb
I was excited about my AirBnb investment. There were some delays with the property manager getting the place furnished and ready to be rented out, but there didn’t seem much to be concerned about. He was pretty good at communicating with me about what was going on. He also listed the property on AirBnb with the date he anticipated it would be ready. To my surprise, people started booking! There were no pictures of the interior of the house nor were there any reviews. Although there were reviews of the co-host, the property manager’s local area manager, who had pretty good reviews.

As the date the property would go live got closer and it still wasn’t ready, the first guest started to complain about the lack of photos. I started to get a bit concerned and I contacted the property manager who assured me he would personally be there to make sure everything was completed. (I’m not exactly sure how his business model works but he manages properties in multiple cities and has a local area manager handle the day-to-day duties, who is listed as the “co-host.”) Photos were finally uploaded onto the site, which was the first time I’d seen the finished version. It looked pretty nice. There were a few things, I thought would have been done better, but for the most part, it looked good. It’s a 2-family house so I had two guests that first weekend. After a few days, I was notified that the listing had its first reviews. I was excited to see them, but after reading the reviews, the jaw dropped.

“Messy”

“Smell of cigarettes”

“No air conditioning”

“Lock on bathroom door doesn’t work”

“habitable” – Definitely not a compliment on an AirBnb review!

The property manager said these issues would be fixed, but he was already getting less responsive. He said it was peak summer season and apologized. I noticed the next day that the co-host was changed. When I asked him what happened to the original co-host, he told me that she decided to leave. At that point, I started receiving contact from the guests. The new co-host wasn’t great at responding to inquiries or guest questions. She also provided the wrong wifi password. The property manager said he would speak to her about these issues and make sure I didn’t have to deal with any calls/messages.

The Final Straw

I receive a message from the new co-host telling me that she was quitting and that she wanted to be paid for cleaning. (The property manager is responsible for this payment based on our agreement) Apparently, she was the cleaner on top of being the co-host. I contacted the property manager and did not hear back. That evening, a guest called me and says that he is trying to get in, but no one has sent him instructions. I did not know the passcode to enter the property, and the guest was understandably upset. I frantically called the property manager multiple times as well as the co-host who had just quit, but there was no response. (I would later learn that it wouldn’t have mattered since the apartment was not cleaned anyway) I was very apologetic to the guest and fortunately, he was able to find other accommodations.

The morning after this disaster, I receive a brief e-mail from the property manager saying that what happened was an absolute failure and that it was hard to find reliable workers. He said that he was diligently looking to replace the co-host. He didn’t even have the decency to call me back to explain what happened. I responded to his e-mail later in the afternoon to inform him that I was terminating our agreement. He never responded to that e-mail.

Implement Emergency Plan

In my previous post, I said that I had a back up plan if things didn’t go as planned. This was the time to implement it as I had guests arriving later that week. I mentioned that I had a family member who lived up in Buffalo. Well, he saved me and got things cleaned up, changed the passcodes, and fix some minor things. I tried to find cleaners but most weren’t used to cleaning short term rentals. They asked to come for an estimate and then schedule a time for the following week to clean. REALLY?! You have to get an estimate? I’ve never heard of such a thing for cleaning, but I’ve also never hired a cleaner. I used an online platform which specifically lists Airbnb cleaners. There was only one in the area the property is located and I contacted her. I was also able to see her full name when signed up on that platform. When I googled her name, I found she had a criminal past. Whoops! Good thing, she never contacted me back because I probably would have said no thanks!

I contacted the backup property manager that I mentioned in my previous post, but I never heard back. She also blogs about financial freedom, so maybe she is so financially free, she has no need to take on more clients!! I contacted the company which offers to pair up property managers with owners and offer a guaranteed rent for the term of the lease. I’m waiting on them to give me the rental amount.

I posted about my disaster on the Biggerpockets forum and the members were very helpful in giving me advice and tips. One person even called me to walk me through how to self-manage the property! Another member who lived not too far from my property contacted me and said that he and his wife were planning to rent their house short term as well. He said they were planning to eventually manage other people’s property in the future and offered to help. Awesome site with awesome people…well mostly. Did I mention that I found the original property manager there?

This past weekend’s guest said that the host (ME) was “super nice” and that the place was very clean! So that makes me feel awesome. I also got in contact with a contractor who I worked with before and will have him fix up some things to improve the property. I’ll also have to figure what I want to do long term.

My Options

I can self-manage the property but this option isn’t all that appealing. I kind of enjoy responding to prospective guest inquiries, but I’m sure that’ll get old at some point. I am a little nervous about responding to guests issues during their stay as I feel attached to my phone. I’ve gotten calls/messages about trouble using the passcode to unlock the door and complaints about another guest taking up a parking spot. I like passive income and I’d prefer not to deal with guest complaints. Though I do save a nice chunk of change by not paying a property manager!

I can take the guaranteed income, but part of me will always feel that I’m giving up the upside potential by only getting that fixed amount. I’ll have to see what they offer me before I decide. Based on the estimate given to me by their online calculator, the amount should cover the mortgage, utilities, and give me a decent amount of cash flow. The numbers won’t be as high as if I chose a commission based payment (if things went well and according to projections), but at least I’m assured a set amount.

I can take up the offer from this young couple trying to break into the short term rental game. The e-mail seemed genuine and provided insight into their lives and experience. I tend to trust people, but I’m a little jaded after my last experience. Also, they are not that experienced in short term rentals so there are bound to be some hiccups along the way.

What would you do? Manage yourself? Take the guaranteed money? Find another property manager?

Why I Decided to Buy a Long Distance AirBnB Rental?

AirBnb
In my previous post many moons ago, I mentioned that I purchased a property for the sole purpose of renting it short-term. While I did say that I learned that many who ran short term rentals earned a few times more in revenue using this approach compared to long term rentals, I didn’t go into as much detail as to why I went this route. Some people I’ve told this to are skeptical and think that it is risky. Sure there will be additional risks, but I don’t make investing decisions lightly and I always have a backup plan.

The “light bulb” moment relating to investing in short term rentals property started after hearing a Biggerpockets podcast episode interviewing Zeona McIntyre who attained financial freedom as an AirBnb Entrepreneur. She was also interviewed on Mr. Money Mustache’s blog in the article From Zero to Wealth in Two Years- With AirBnb? The part of the interview that really intrigued me was when Zeona said that she purchased a property long distance in St. Louis and rented it out on AirBnB. I don’t recall the exact numbers but the rental property in St. Louis cost approximately $70,000 and with the revenue she generated through AirBnb, she would have been able to purchase the property in just a few years.

When most people think of short term rentals, they think of vacation rentals like maybe a ski resort in Aspen or a beach town in Myrtle Beach, but those locations can be very seasonal. It’s possible that the high season more than makes up for the low season, but I didn’t want to chance it. Another assumption is that short term rentals do well in locations with high demand such as San Francisco, NYC, and Miami. Other than the fact that San Francisco and NYC have strict regulations regarding short term rentals, housing costs in those locations are very expensive. The increased revenue could be negated by the expense of those sky high mortgage payments. I was looking to find the sweet spot where the cost to purchase a property was affordable, but there was decent demand for short term rental guests. I found a few prospective locations such as Kansas City, MO (I have a rental there!), Memphis, TN, Columbus, OH, Oklahoma City, OK, and Indianapolis, IN. The location I eventually chose, Buffalo, was not really on the radar, but I felt more comfortable with it as it was closer to home, I had a family member living there, and I had originally planned to buy a long-term rental property there.

I was reading a blog post on Mashvisor, a site geared towards real estate investors which provides analytics and data, and it mentioned Buffalo, NY as a potential location where short term rental could work. I also contacted Zeona as she offers short term management services. She told me that she would only be able to manage it once it was fixed up and furnished, but I was hoping for help with that as well. She did, however, tell me that she had a friend who was had short term rentals in Buffalo that were doing well so that gave me some confidence. I also found a company called “Rented” which matches short term property managers with owners who want their second home or vacation home managed for them. The company offered the standard commission based management structure but also had what they called a “guaranteed rental contract,” where the owner would be paid a fixed monthly amount. At the time, the site had a calculator which would estimate the monthly rent amount you could be paid if you entered the address and the amount of rooms and bathrooms. While it is only an estimate, I entered the info of my prospective property and it looked pretty good. Eventually, I found a property manager on Biggerpockets who specifically mentioned that he managed properties up in Buffalo.

“If you don’t have a Plan B, you don’t have a plan.”

Even with some assurances from various sources that a short-term rental would be profitable, I like to have a back up plan…just in case. I had already contacted a backup property manager who could manage the property if the one I decided on wasn’t up to par. I also made sure that based on the numbers, the property would work as a long term rental if this short term rental experiment didn’t work out.

The main concerns of those who are skeptical of buying a property to rent out short term are that the cash flow is inconsistent and that guests will destroy the property. Since my property has only been up and running for about a week, I’m in no position to say whether these assumptions are true. However, based on my research, I did not find these concerns to be warranted. Sure, the cash flow is not as predictable as the fixed amount a long term renter pays, but there are many ways to get a good idea as to how much revenue you can earn. Go to AirDna, Mashvisor, or similar sites to see the occupancy rates and the price that they were charging. The sites will aggregate all the data and tell you how much current short term rentals are making (you have to pay a fee to get this information). With regard to the concern of guests destroying property, that can be true of bad tenants as well. When someone books on AirBnb, they have their credit card on file and they often also have reviews as to how they are as guests from previous stays. There is also the insurance that AirBnb provides if the guest destroys the property, though I wouldn’t want to rely on their insurance.

Update #1: I wrote in my previous post that I planned to convert my Kansas City, MO property into a short term rental when the lease ended. I changed my mind. The property manager found a tenant who wanted to take over the property immediately after the lease ended and the new rental rate was $1050 compared to the $895 the previous tenants paid. I figured it would be best to see how this AirBnb experiment went before I doubled down.

Update #2: Good thing I didn’t double down because my AirBnB experiment BLEW UP IN MY FACE. Just as I was finishing this post, I had to put out a big fire. (No, not a real fire thank goodness) I will definitely try to put a post up about the disaster soon.

Update #3 : Just read How to Establish a Profitable Vacation Rental-The Definitive Guide on Abandoned Cubicle. Yes, I can confirm it is the definitive guide! A very comprehensive post about buying a property to use as a short term rental. You should probably head over there and read that rather than listen to me ramble on about my AirBnb experiment!

Real Estate Update and Shift in Strategy

Buffalo house
After writing over 100 blog posts, I’ve almost never received any e-mails from readers. I guess nothing I’ve written about has intrigued anyone to inquire further! However, of the handful of e-mails I have received, almost all of them ask about the out-state-property that I bought back in 2015. I just realized that I’ve never written an update about how that investment has gone so here goes.

I’ve had some repair issues with that property which have really cut into my returns. The first major repair was about three months after buying the property and one month after the tenants moved in. The tenants reported some drainage issues and the plumber hired by the property manager determined that the drain line was drilled. Apparently this issue was somewhat common during that timeframe as Google’s contractors were laying fiber optics throughout Kansas City, MO. Google’s contractor paid for the repairs, but refused to pay the diagnostic fee as well as the initial temporary fix. That cost was about $750. I could have tried to take them to small claims court, but being a long distance investor, it didn’t make sense to go to that trouble.

The Numbers

After those repairs, there were also some issues with the flooring in the kitchen which cost $600 and the garage door opener which cost $350. All in all, I paid $2500 in repairs for 2016. Ouch! Total rents received were $10,203 with management fees of $918 and mortgage payments of $5736 (including tax and insurance). In 2017, that my repair costs went down to $1441. My total rents were $10,431 and management fees of $1320 with about the same in mortgage payments. So in 2016, I made just about $1000 and in 2017, just under $2000.

While I made a little bit of money, it was nothing to write home about. Taking into consideration that I’d have to put money aside for future capital expenditures like roof, furnace, and boiler, as well as possible vacancies, the numbers weren’t all that great. Of course, I wasn’t going to build wealth with just one house. I needed to add to my portfolio. There was a bright spot though. A very bright one. In my initial post about the investment I said that the property appraised for higher than what I paid due to the renovations. I always took solace in that fact when the numbers weren’t that pretty. Well another happened: appreciation. I will say I got pretty lucky here as relying solely on appreciation is speculation. One day when I was checking Zillow, I noticed that the “Zestimate” showed the property to be worth about $110,000. Since Zillow isn’t always accurate, I contacted the broker who I purchased the property through. He told me that the Zestimate was a pretty fair number.

This got me excited about investing again, though I know I shouldn’t count on that appreciation. I contacted the broker/turnkey provider to see if I could purchase another property. He basically told me that he had more investors than he had properties but he would let me know when he had inventory. I never heard back from him. Wow! I guess business is good when you turn down investors. Because the property appreciated, I would be able to do a cash-out refinance and take equity out to buy another property. I also had some money saved up and was looking to purchase more real estate nevertheless. But it’s always good to have more capital.

Change in Plans

As I didn’t hear back from the provider in Kansas City, MO, I turned my attention to Buffalo, NY. I had considered investing there a few years ago since I have some family there, but couldn’t find a good turnkey provider. This time around, I was thinking maybe I wouldn’t need one. I had just read the book Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Properties and figured I could do it without a turnkey provider. After scouring the Biggerpockets forums relating to Buffalo, I happened to see a post from someone who said that short term rentals could earn two to three times more revenue than long term rentals. I was always fascinated about short term rentals but assumed that it would work only in hot tourist spots. However, after reading articles from AirDNA as well as Mashvisor which are sites geared towards real estate investors and have analytics and data to back up their articles, I started considering the possibilities. In one AirDNA article, it listed Kansas City as a top producing Airbnb location. It wasn’t necessarily because it had the most revenue. It took into account the costs to purchase property there. Sure, an Airbnb in Miami might generate more revenue but it would cost a lot more to purchase a property there compared to Kansas City.

Obviously, I was very intrigued to see KC so high on the list. I own a property there! However, after doing some research, it looked like the legislature was considering passing a law restricting short term rentals. So, back to Buffalo!

Shift in Strategy

At this point, I was reading and listening to everything I could about short term rentals. Many seemed to say that provided two to three times more revenue than traditional long term rentals. I used AirDna and Mashvisor to see how AirBnb properties were doing and it seemed to confirm this. I also spoke to a few short term property managers who said that there was demand in the areas I was targeting so I started looking for properties. Since I had decided to buy a property for the purposes of renting it short term, I knew I’d have the additional expense of furnishing it so I decided to take some equity out from my KC property. During the refinance process, the property appraised for $112,000 and I was about to take out about $24,000.

I found a two-family house in Buffalo which I closed on last week. The property manager and contractor will take a look at it to see what upgrades and repairs are needed to get it short term rent ready. During this time, my property manager in KC also told me my tenants were not planning to renew their lease at the end of June. As luck would have it, I also found out around this time about the short term rental legislation in KC. While some restrictions were passed, my property was just outside of the city limits and they do not apply to me. So guess what? I will be converting my KC property into a short term rental as well.

I don’t know how this will go but I’m will to take the risk and see how well these properties perform as short term rentals. Worse comes to worst, I can always convert it back to a long term rental. Stay tuned and I will try and update how my properties are doing.

Have you invested in a property for the purposes of using it as a short term rental? How did it go?

Is There a Shortcut to FIRE?

credit: Dan Gold (Unsplash)

credit: Dan Gold (Unsplash)


I started reading tons of personal finance blogs years ago. At first, the FIRE (Financial Independence Retire Early) blogs were a small portion of the personal finance niche, but that niche is now on FIRE. (Pun intended) When I first stumbled upon the concept, I read every article on this topic. I’m going to say I first learned about the possibility around 2011. The majority of the FIRE crowd follow a simple method to attaining financial independence at a early age. The formula is no secret and is very simple, but just because it’s simple doesn’t mean it’s easy. Basically, you have to have a high savings rate and funnel those savings into index funds.

Investing in index funds is as simple as it gets. I am a big fan of index investing and mainly invest that way myself. After following the early FIRE blogs, I pushed my savings rate higher by cutting some expenses and contributing more into my tax-deferred accounts. I’m pretty frugal by nature so there wasn’t much to cut though. Even with following this simple method, I felt that I was still far away from reaching early FI even during a bull market.

I think for the most part, those who reach FIRE early purely from investing in index funds have a combination of high incomes and/or low expenses, mainly due to living in a low cost area. The stock market has also done well…going on almost a decade…which definitely helps returns. However, for those retiring early only by investing in index funds, they got there through brute force savings as compounding can only do so much when it is such a short timeframe. Kudos to them. It is awesome to attain such a high savings rate to be able to reach your FIRE number. My income is good but not great, and I live in the high cost area of NYC. My index funds were doing well but not well enough to hit FIRE. A few years into my FIRE journey, I started to feel a little down because my goal seemed so far away.

Are you down with OPM?

“You need money to make money.” That is as true as it has ever been. There’s just so much money I can plow into index funds. I can’t use Other People’s Money! Well technically I can, but I wouldn’t want to. I can invest in the stock market on margin but that seems pretty risky, especially at this point in the market cycle. The main risk of using margin is if the stock has fallen to a certain level and you receive the dreaded margin call where you’d be forced to contribute more cash or be forced to sell. Using leverage in real estate in my opinion is a little safer. When you take out a mortgage, there is generally a low fix rate over a pretty long period of time, likely 30 years.

Of course, when taking on leverage there is more upside, but there can also be a worse downside. However, unlike with the example of the margin call, it is much more unlikely to have a mortgage call. Obviously, the main risk with taking out a mortgage is not being able to pay the monthly mortgage leading to foreclosure. Therefore, when you purchase a rental property, you make sure it will cash flow. Having a cash flowing property doesn’t take away all risk. What if your tenant doesn’t pay? What if you have a long vacancy? Good tenant screening as well as choosing a property with an in-demand location will definitely reduce this risk though.

One of the reasons I chose to invest in real estate out-of-state is because the houses are a lot more affordable. While I might have been able to round up the money to invest somewhere closer to where I live, the mortgage payments as well as the property tax payments would be a lot higher. If there was a vacancy or if my tenant didn’t pay rent, I’d be in trouble, whereas with my current rental, I could continue to make the payments.

I am not turning my back on index investing. I am still a big proponent of it, especially when you don’t yet have the capital to invest in real estate. However, it is hard to dispute the power of using leverage to increase your returns. Well respected personal finance blogger Paula Pant, who is also an advocate of index investing, said that investing in real estate is the fastest way to reach financial freedom.

Are you using leverage in your investments? Do you invest in real estate?

The Holy Grail of Passive Income

credit: Freedigitalphotos.net by Scott Chan

credit: Freedigitalphotos.net by Scott Chan

When I told my mom that I bought a rental property, she was a little worried. “What happens if you can’t find a tenant?” “What if there’s an expensive repair?” “How do you know the property manager won’t rip you off?” Granted, most of worries were because it was an out-of-state property, but some of it seemed to be the belief that passive income is not possible. Actually, I see this mindset very often with owners of rental properties. Many believe that if you have to outsource management, you lose control and will not make money. I have a contrary view. If you spend all your time dealing with the day-to-day minutia, you can’t possibly have the time to scale your business. A few months after the conversation with my mom, she mentioned that my cousin, who has a full time job, took on a part time job as a real estate agent. “Oh that’s good, he’ll earn some extra income,” she commented. This made more sense to her. You work. You earn money. Nothing against taking on a side hustle as a real estate agent. It’s actually something I considered when I was younger, but now with a family, I don’t want to take on a second job. I don’t want to trade my time for money. I want to earn money even when I’m asleep. I want my money to make more money.

Cash Flow Quadrant

Robert Kiyosaki’s CashFlow Quadrant lists the four ways that you can earn money. Most of us are on the left side of this quadrant. On this side of the quadrant, you are trading time for money. In quadrant E (employee), you have a job. You are an employee and you work for the “Man.” The employer controls how much you make and determines your hours as well as whether you are allowed to take off from work. Like most people, I mostly reside in this quadrant. In quadrant S (self-employed), you own a job. You have a little more control over your time and how much you make. However, the downside is that you have more responsibilities and those in this quadrant often work long hours. Before my father retired, he owned a wine and spirits store. His peers and family members sometimes made assumptions about how well he did financially because he was his own boss. However, when he bought the business, he really only bought a job for himself and my mother, who helped him. If the store wasn’t open, no money was made, so it was open 11 or more hours a day, 6 days a week. So while he was technically his own boss, it might not necessarily be better than being an employee.

On the right side of the quadrant is where I strive to be. In quadrant B (business), you are a business owner where you own a system and other people work for you. While my dad owned his business, he was not in the business owner quadrant because if he was not working, he wasn’t making any money. In quadrant I (investor), your money works for you.

There are plenty of passive income businesses and investments that might bring in some extra cash and I’ll list some of the ones that I’ve considered, am considering, and some that I’ve done. For me, the business or investment I’d consider would be something that didn’t take up a lot of my time. I’m looking for a passive income stream, not another full time job. I have no problem if it takes some time to set up but it would have to run somewhat on autopilot afterwards. I’m not in the stage in my life where I want a second job. Heck…I barely want a first job!

Amazon FBA

Retail Arbitrage

I’ve sold things on Amazon before and made a few bucks. I think I used Amazon instead of eBay as I found it easier to list items if others were selling it. I’ve made a decent profit selling old things I had, valuable books that people placed in the compactor room as well as some items found at deep discounts either at thrift stores or the clearance section. I could also have used Craigslist but I’m paranoid about meeting people to exchange goods and didn’t want to have to spending time having to meet up.

It got even more lucrative to sell on Amazon when Amazon FBA was introduced. FBA stands for “Fulfillment by Amazon,” which allowed 3rd parties to ship things in bulk at a discount to Amazon warehouses and have Amazon would fulfill the orders. The orders would even qualify for Prime 2-day shipping. I was shipping orders after I received the request and it was definitely not 2-day shipping so I knew this would be the way to go. I looked into it but ultimately, selling things I own and don’t want and finding things that others don’t want was okay but not sustainable nor was it a predictable source of income. Finding things at deep discounts also required a good amount of work. Money could be made using this method but it was just too time consuming for me. You can read more about it at Side Hustle Nation.

Private Label

Another strategy I considered was to find a product that I thought would sell, source it from China via a site like Alibaba.com, mark up the price and sell it on Amazon. I looked into this idea but it’s probably a little more complicated than it first appears. Michael who blogs at Financially Alert detailed how complicated it can be to get started and decided to throw in the towel, but apparently is back at it. Alex who blogs at Cash Flow Diaries says he “failed miserably” and also goes into details of what went wrong. So I’ll put this one on the back burner as it seems a little too time consuming and complicated.

Laundromat

I first came upon this idea when I read a post on Mr. 1500 Days’ blog. He wrote about Laura who bought unattended self-service Laundromats which seemed like it could be manageable even with a full time job. She says that she spends about 10-12 hours managing the business. I also listen to a real estate investing podcast where the host interviewed someone who made great returns buying Laundromats. I think the guest quit his day job when the Laundromat business proved to earn more than his day job. Owning laundromats might not sound lucrative but apparently they can be.

Self-Storage Units

Much like Laundromats, this business seems like it can be lucrative without too much time. I don’t recall where I read about it, but it’s possible to have a set up where the storage units are self-service and unattended. And even if some type of staffing is needed, it can be minimal. I do feel that unlike Laundromats, the self-storage unit business might suffer during a recession while Laundromats will continue to do well since people still have to wash their clothes! With both the Laundromat and self-storage units, there will be a big upfront capital investment and I’d have to do a lot more research before diving in.

Vending Machines

It sounds like easy money right? You buy the machine, place it and the candy/chips/soda sells itself! You make money while you sleep and restock when necessary. I haven’t done much research into it but I’m sure it’s definitely not as easy as it sounds. Jamila mentioned on her Journey to Launch podcast that she tried this and it sounded like finding a high-traffic place that would allow you to place the machine, even for a fee, was not all that easy. She has much more hustle than I do so I’m not sure if this would work for me.

Dividends

I’m a fan of index investing but there are many who are strong advocates for dividend investing as they like the quarterly cash flow. I’ve owned a few stocks that paid dividends but my individual stock portfolio is very small, and the individual stock portion that pay dividends are even smaller. My issue with using this strategy is that dividend yields are relatively low at 2-3%, so you’d need a lot of capital to generate a decent amount of passive income.

Peer-to-Peer Lending

I opened a Lending Club account years ago where you can lend money in increments of $25 to borrowers. Many borrowers are looking to consolidate and pay off debt. Others want to pay for home improvement, wedding, or start a business. I’ve heard people make pretty good returns investing there but my returns were always in the 6-8% range. The rate started dropping with defaults. Being that the loans are unsecured, I’m reluctant to invest more especially if another recession hits. Actually, I’m in the process of slowly liquating my investment.

Kindle Publishing

Not only has Amazon made it easy to sell things, it has made it easy to self-publish books. No longer do you need to beg and plead a book publisher, you can do it all yourself on this platform. Writing a book seems like a huge task, but, hey…I do write on my blog…occasionally…almost never. But if I could create a masterpiece, self-publish, and earn passive income with it, that would be awesome. After reading through a few e-books, I wasn’t sure I was up for the task. I was considering the fiction genre and my writing skills are not up to par. The non-fiction genre would probably be personal finance related and that niche is pretty saturated. Also, as I barely publish blog posts, what made me think I could tackle an entire ebook?! But what if I didn’t have to!!

On an podcast episode on Side Hustle Nation, the guest said that he made $4260 a month on Kindle and he didn’t even write the books! He outsourced that responsibility to someone he found on Upwork or a similar site. I am really considered doing this but that market seems very competitive.

Blogging

I’ve heard you can make income blogging. Who knew? Not me apparently. Running a blog is a lot of work and I honestly wouldn’t know since I don’t do much of that things that need to be done to make a blog financially successful. While there is a lot of work involved, once you are making some income, I’m sure there is a way to cut down on many of the technical and administrative tasks by hiring a virtual assistant. Michelle from Making Sense of Cents is pretty successful in making money through her blog so check out her tips.

Real Estate

Long Term Rentals

No, real estate is never completely passive but my first rental property is as passive as it gets. The property manager contacts me if there is a repair above $250, otherwise I check my owner’s dashboard to make sure I got paid rent or if there were some minor repairs that were necessary.

Short Term Rentals

This is the strategy that I’ve been focused on the last few months. It’s probably part of the reason why blogging has taken up a backseat. While I had an decent experience with my long term rental, the cash flow was just okay. I did have a good amount of repairs which cut into my profit, but I’ve been reading about renting out houses short-term, mainly via AirBnB to really increase your earnings. A property earning $1000 a month might earn two to three times that much if you’re renting it for $100 or more a night. Obviously, this doesn’t sound like a passive income, which is why I didn’t originally consider it. However, if you hire a property manager, you can offload a lot of the day-to-day duties. While it will never be completely passive, it can be very manageable. I am actually in the process of purchasing a property for this exact purpose. Stay tuned!

Crowdfunding Platforms

Some of the big companies like Fundrise, Realty Mogul, and Realty Shares gives investors the opportunity to invest in big real estate deals. It could be a new apartment development or a commercial building. There are also crowdfunding platforms like Peer Street and Patch of Land which allow you to invest on the debt side, basically being a real estate lender. I’ve dabbled in this area. I put some money in a lesser known crowdfunding company called Holdfolio which invests in houses and now apartment buildings in Indianapolis and Ohio. The returns are about 10-12% with possibility of a higher return if the properties have appreciated when they refinance. (I believe the big companies I mentioned earlier only took accredited investors at the time which is why I went with the smaller company) I’ve also put a small amount of money in a crowdfunding company called American Home Preservation where you can invest in increments of $100 with a preferred 12% return to investors. The company buys non-performing mortgage notes and try to get them performing again. Basically, they buy mortgages at a discount as the homeowner has stopped paying, they try to work something out with the homeowner to make it a win-win.

What other passive investments or businesses have you been involved in or are considering? I want to hear your ideas!