I think writers are either incredibly ego-centric, or just so persistent as to border on pig-headedness. Don’t worry. I count myself amongst your ranks. Who else would tackle the task of writing a novel. Not just one book, but many over the course of a lifetime. Who do we think we are? Seriously, who gets up thinking, today, I’m going to write a 300 page novel? And you and I both know, it’s not a 300 page novel in a day. It takes grit. It takes a pretty tough hide when daily you’re confronted by more sensible things to do with your time. It takes persistence.
It’s the same with creating passive income streams. It’s not going to happen tomorrow. It’s a marathon.
What, you ask, is a passive income stream? Those are sources of income that flow to you long after the work has been completed. Those are things like: stock dividends, royalties, rental income. The list goes on.
You’re probably saying, “yeah, sure. If I had some rental property to rely on as a passive income stream….” For years I’ve been saying something similar: “Yeah, if I had been born a trust-fund baby…” The sad truth of it is, I wasn’t. Lots of people are not, but when you decide upon what form you want your passive income streams to take, you make a plan, set goals, and do it. It’s the long con, er, game. It’s like saving for retirement, it’s like… writing a novel. But in this scenario, exerting effort to develop your passive income streams enables you to devote more time to your art.
I can only speak from personal experience, so while there are many different sources for passive income, I can only speak about my own. I’m not a gambler. I can’t even spend a buck for a scratch lottery ticket without major misgivings. “You got to be in it to win it…” and I’m definitely not “in it”. So my passive income streams have mostly taken on the form of things I can see, touch, feel, smell… rental property, antiques, and on-line sales.
Rental Properties: This first one, rental income, I sort of fell into. I wasn’t given a house to begin with, but I did grow up around this sort of thing. My father, whose hobby was hard work, would come home after his 9-to-5 as an estimations analyst, shuck his work clothes for different work clothes. The second set of clothes were usually not all that clean. And from the time he got home until dark, he built houses… which he would then rent or sell, then start the next house. Over the course of his lifetime, he built 5 homes from scratch and renovated as many more. And when I say, “from scratch”, I mean just that. He hand dug footings when he didn’t have enough money to hire a backhoe. He laid block, he wired, he plumbed. He would usually enlist the help of his brothers or friends for a weekend when it came to the actual roof raising, and he returned the favor in kind, then he would spend the cold winter months working on the inside of the house, every pay day, saving money to spend at the local home improvements store. When he reached a point in construction that left him stymied, he would drive around the county, find a house under construction at the same phase, and go up to the guys building it, and ask questions. Each house took him about 5 years to complete, start-to-finish, paid for as he made the money.
So in that sense, yes, I was given a great gift. I grew up around it, saw the process (five times at least), and learned a thing or two about being a property owner/manager.
I purchased my first house for $29,500 in the late 1980s. The monthly payments, around $260 dollars at the time, at 8% interest, 30 year loan, was as much as I could afford. I think the rent rates at the time were almost double that, but there was taxes and insurance, and repairs. Oh my, were there ever repairs. I sold that house and bought another for twice the price. Circumstances forced me to cut that second house in half and rent out one side while I lived in the other side. The sort of renovations were mostly gross cleaning and painting. I can swing a paint brush, by god, and if need be, a sledge hammer. And finally, I sold that to buy the property I currently manage on the same lot as our home. It had an ancillary cottage on the property. (And by “cottage”, I mean gutted shed.) But there you have it. It was home and gave me a separate space to rent out, then another space in half of our house, so today, I have two Airbnbs. I have over 200 five-star reviews, and that has afforded us a source of comfort in knowing, if our backs were to the wall, we could make it.
The Antiques biz: Drive down any Main Street Community and you’ll see them – those antique malls whereby a group of hobbyists band together, rent one large space, then divvy it up, each paying a percentage of the costs, selling their wares, and (hopefully) making a profit. My mother started one of these when she “retired” twenty-five years ago. It was her dream job – shopping, owning her own shop, shopping, repairing and repurposing furniture, shopping… 20 odd years later, my father passed away. Mom couldn’t run the space by herself, so in I stepped. I ran the shop for 4 years, and wrote very little. In that time, I doubled the revenues, doubled the number of dealers in the space, and converted it to that cooperative model whereby many hands make light work. Mom still owns the building, but in June of this year, I turned the business over to the other antique dealers. I just patch holes and plunge the occasional stopped up thing. But whether you’re the property owner or one of the dealers, there is a great source of passive income. Each month, dealers fill their space, sort it, price it, display it, clean it, and take turns working one or two days selling everyone’s wares. At the end of the month, for essentially, about one week’s worth of work, there’s a nice plump little pay check. (If there’s not a nice plump little paycheck, you will want to reconsider this as an option and find another passive income stream in which to invest.)
Royalties: All those books you’ve been writing, while working the day job, will eventually begin to pay you in dribbles and drabs. It might not be much at first, but remember, this is a looooong game. Are you handy with a camera? Why not put those images on a royalty paying site? Do you love painting? Crafting? Can you sell the fruits of those passions on-line? Do you have expertise in some area that you can share with others on-line? What about an online auction site? You’d be surprised what your little Saturday pastime can earn you in on-line sales.
Recently, we had the “opportunity” to put those passive income streams to the test. A month ago, my husband was laid off. The company, in trouble financially, was in receivership, which meant there was no severance pay. He was given notice one day, and left with not quite all of the pay he was due the next. It would be so easy to be bitter about that, but I knew we would be okay. With the confidence of having some fairly steady passive income streams, I could reflect on my husband’s employer with compassion. That job supported our small family of four for 25 years! How could anyone be bitter about that? Okay, I’m a little sad about the company… and the other people who were invested in that company. But we realized we were not destitute. We had my passive income streams, built by working those jobs, staying up late nights painting rental properties, Saturdays spent working in the antique shop, working the occasional part-time job.
So think about your passions. What is it you love to do that you could convert into a passive income stream? Don’t neglect your 9-to-5 prospects, but squirrel something away for some sort of long-term investment and start building your passive income streams.
Next time, I’ll talk about “soul sucking” jobs and how to make them not quite so, er, sucky.
As ever, Go Write Some Words!… and don’t neglect your passive streams.
(Disclaimer: This series consists of my humble opinion. Every situation is different. This is simple homespun advice based on my own experiences. Seek business counsel, accounting advice, legal advice, from a professional.)