How financially stable are you going into the holiday season? This time of year is the most expensive yet magical part of our lives.
In what ways can we increase our income without spending our valuable time? To reach this challenging balance, we must create passive income streams.
Rents to the win. One of the best ways to increase income is by becoming a real estate investor. No, I am not talking about going out and buying a new rental property.
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The media has skewed the concept of being a real estate investor. In short, investing in real estate means generating rental income.
Luckily, there are tons of ways to invest in real estate without obtaining additional property. However, these new ways will require us to share our space or home.
If you can overcome the idea of renting your space or parts of your home to another human, you will become wealthy overnight.
What is wealth? Wealth is the difference between your income and expenses. Therefore, earning $5,000/month, and spending $5,000, is not the path to wealth.
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If you decide to rent your master suite to someone for $1,000, you now have $1,000/month in cash flow. If you can invest $500/month of this cash flow into the stock market, you’ll start creating another passive income stream.
Eventually, you’ll have $1,000/month in rental income and $1,000/month in dividends. My wife and I are doing this. We have $2,300/month in rental income and $1,000/month in dividends.
We now have enough cash flow (income minus expenses) to call ourselves wealthy. However, we keep renting rooms because each month makes our futures grow brighter.
Build the mindset of a landlord. You can’t just invite someone to live with you and think things will be easy. Becoming a landlord can be challenging for many people.
I am a US Marine, so I am used to confrontation. Many people don’t enjoy confronting others, which causes them stress and anxiety. I have some alternatives for you later in this article.
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Your roommates will test you, just like children will push you. They will try to encroach on your space and time. You must have the strength to tell them to keep their attitude and items in their room.
We have rented rooms for 3.5 years—allowing us to invest $250,000 in the markets. The money is great if you can get past the social aspect. Read the article “Housing Hacking to Financial Independence” for more on the monetary benefits.
No tenant, no problem. If you don’t love the idea of having tenants, there are more options for you. You can rent out space inside your home or on your property.
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There are ways to rent your garage or parking space. If you have a decent-sized yard (probably ½ acre or more), you can create a dog park for city folk to bring their pets.
You can purchase a storage shed and rent it out. My wife and I collect $100/month for renting out half of our storage shed. We also earn $20/month for letting a friend keep his trailer on our property.
You may want to add RV hookups and an RV to rent the space via Airbnb. Tiny homes are all the rage on Airbnb, as many people want to experience the RV life before making the final leap.
Real estate is a mindset. Another way to earn income on real estate is to downgrade your living or move to a small city.
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For example, say you have $300,000 in home equity in your home in California. You can sell your home and move to Alabama, buying a home for $200,000.
This move leaves you with a small amount of money to invest in the future. Yes, you would need to find a job where you can work remotely, but that is not too difficult today.
By moving to a small city, you will change the destiny of your family forever. I own $1.3 million of property between Florida and Arizona. I am clearing $200 in rental income across all my properties, including my primary residence.
That’s right; I am not paying for my primary residence out of pocket. Therefore, all my cash flow can go directly into the stock market to earn 9% inside my income portfolio.
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In a big city like San Diego, $1.3 million doesn’t get you much. On top of that, you will be paying the entire $6,000/month mortgage out of your pocket.
Where do you want to retire? I will live in San Diego for a few years because of military orders. These orders allow me to see California firsthand.
I actually grew up in San Diego, so coming back at age 41, and owning multiple properties, is eye-opening. Most people don’t own their homes here.
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If they own their homes, they struggle to maintain a good “life-balance.” They are house-rich and cash poor. However, for them, living and retiring in San Diego is enough.
Where do you want to retire? How much cash flow do you want going into retirement? I want at least $20,000/month in passive income on my first day of retirement.
To lead an extraordinary life, you must take extraordinary measures. Living with your family of four in a 2,500-square-foot house will not give you enough cash flow to save and invest.
You may be working a job this holiday season, which pays for your gifts and presents. However, in 20 years, will you want to be working?
How will you afford your expenses, travel, and gifts if you don’t have a job? You need to ask these questions today to build a plan for tomorrow.
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Conclusion. Real estate is not a challenging income stream to start. You simply decide that you want to earn passive income.
You go clean up one of the rooms in your house, add a new bed and mini-fridge, and put it up on Facebook or Craigslist.
Within a few days, you’ll have a tenant and learn how to become a landlord. It will be bumpy initially, but you’ll get the hang of it.
If you want an easier time, read “The Book on Managing Rental Properties.” Before you know it, you’ll have $1,000/month coming in passively.
Your rental room will be your partner in crime. It will help you achieve your financial goals to retire in comfort. Plus, you can keep your rental room during retirement, affording you even more freedom.
However, most people believe they deserve to live alone in a massive home. We have become a society of individualism, to our detriment. You can achieve incredible wealth if you can get over this independent mindset. Good Luck!
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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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