The world is a beautiful place when we take the time to enjoy the view. Sometimes it is hard to value the world during our hectic and chaotic lives. But, some things can make your life even more beautiful.
Here are my top four things that can make your life even more vibrant: a fantastic spouse, a great family, being debt-free, and having passive income.
1) Having a great spouse or partner motivates you to improve yourself every day. You can’t let that person down, no matter what. I wake up every day to grind on my writing and books, knowing that my wife is doing the same.
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2) A great family pushes you to build your legacy. You want your kids to do well in life. Also, you want to put yourself in a position to assist your parents as they age.
3) Debt can turn your life from full-color to black-and-white. I didn’t realize how bad debt can make your life until we became debt-free almost a year ago. If you are struggling with debt, read Dave Ramsey’s “Baby-Step Millionaires.”
4) Finally, having passive income is the cherry on top of your life. If you think your life is amazing now, wait until you add passive income to the mix. Passive income consists of automated business, royalties, dividends, interests, and rents.
What is Rental Income? Today, I want to focus on rental income. Of all my income types, I talk about rents the least. It’s not that rents are not significant; it’s just that they are very boring.
That’s the beauty of rental income—they are boring. You find something that you can rent out, install a tenant, and replicate the process.
Many people believe that the only way to build rents is by buying single-family homes. However, that is not the case. Rents can come from various sources. Let’s take a look at some of them.
1) The first and most crucial rent payment you can get is lowering your own cost of living. You will always have some sort of living expenses—even with a paid-off home.
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If you are single and move from a $1,000/mo apartment to a $500/mo room rental, you made $500/mo in rental income. Most people don’t think like this; however, if you form the mindset of an investor, this is the thought process. I wrote more about this mindset in “Real Estate Investing in Your 20s.”
2) House hacking is the next type of rental income. Again, this has a low risk/high return rating. Most people don’t want to open their homes to outsiders, which I can understand. In that case, find a different way to hack your home.
3) Airbnb is a form of house hacking. You can apply Airbnb to your garage, rooms, and entire homes. Interestingly, you can use it for RVs and campsites.
4) Single-family homes are a great way to get into the rental game. If your first home is a starter home, you can rent it as you upgrade.
5) Property management is a way to put rental income in your pocket. If you manage your own properties, you will save 8-12% every month on expenses. You shouldn’t take managing your own properties lightly; however, it isn’t impossible.
6) Banks consider multi-family homes between 2-4 units as residential homes. That means you can use your VA loan or first-time homebuyer incentives to purchase a duplex or triplex. This is the ultimate form of house-hacking.
7) If you have land, dropping an RV, mobile home, or storage unit is a great way to add rental income. I wrote a three-part series on this topic (small, medium, large).
Even more beauty. There are even more ways to increase your rental income empire. If you have the patience, you can find distressed properties and renovate them. A great book on this is “Buy, Rehab, Rent, Refinance, Repeat.”
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The only person who can stop your rental property empire is you. Now, let’s investigate how much rental income you will need.
Your retirement, your way. The best part of adding rental income to your portfolio is the security. Yes, you may have a vacancy from time to time, but in large, people need housing.
Each source of rental income is a piece of your larger retirement landscape. However, you will need to ask yourself some questions sooner rather than later.
“How much time do I have to dedicate to finding and maintaining properties?”
“Do I want to become a landlord?”
“How much money do I want from real estate?”
“Do I want to be a passive or active investor?”
Each answer will direct you to a different form or amount of real estate. Right now, my wife and I own three homes. One has a property manager, the other we manage ourselves. We have two roommates in our primary residence.
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This is a good amount of diversity and creates about $2,000/mo in passive income. Once I return from overseas, I may look into buying some more real estate. However, I am not a huge fan of adding more tenants to our portfolio currently.
The family business. The good part is that my 15-year-old son is in a much better position to take care of tenants when he grows up. He will have the energy to run around and deal with tenants.
After 23 years of the Marine Corps, I have had my fill of other people’s problems. Real estate is a great family business, so hopefully, my son and I can expand our exposure to rentals.
The greater real estate market. Real estate investing also brings opportunities for additional jobs and experts. You have general contractors, real estate agents, property managers, and lenders. Each profession puts you closer to finding amazing deals under market value.
The key to real estate is finding deals before they hit MLS services like Zillow. These are called off-market deals. Becoming one of the above professions gives you access to this type of deal if you are proficient at your job.
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Conclusion. As you can see, real estate is a vast economy. You, too, can involve yourself in the real estate game; however, it takes knowledge, patience, and determination. No one is going to gift you a home.
Look at your personality and make honest decisions about your future in real estate. Avoid being a real estate agent and property manager if you don’t like people. You should invest in REITs.
If you don’t like math, avoid real estate altogether. This is 100% a numbers game, and you have to love crunching them. There are ways to get into real estate without doing math. I would recommend dollar-cost averaging into a REIT like Fundrise.
That is the true beauty of rental income; there is something for everyone. How will you start (or continue) your real estate journey today?
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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