Welcome to My May 2016 Monthly Update!
Each month I give an update of my passive income businesses as I seek to quit my job. In it, I cover the ups and downs of all the passive income ideas I use to create income for my family.
Right now I am at the start of six weeks of vacation from my job.
You heard that right! I’m taking six weeks off from my job!
There are a number of reasons why I am spending six weeks of my vacation time right now before he quit my job but the main one is that I have many things to do before I quit my job. I have only been off for a week now but I have gotten so much more done for my passive income business in one week than I did in months working for my job.
I rarely take time off from work and have saved up lots of hours to spend before I quit. The amazing thing is that I will have another six weeks of vacation time to spend after this first six weeks is over.
If I had any doubt that quitting my job was the right thing to do, this first week has completely made my mind up that I need to quit AS SOON AS POSSIBLE!
It’s not just the freedom that I have by not working for someone else but that I will make so much more money working for myself. My hourly wage of $30+ an hour at my job is pennies compared to what I make with my passive income.
On average, it takes me about five hours of my own personal time to buy a rental property. Those 5 hours used to purchase one property will make me money every single month until I decide to sell it. My hourly rate keeps going up because the money keeps rolling in.
Seriously, for five hours of work, I make money over, and over, and over, again.
The amazing thing about passive income is that the less you work, the more money you make.
Book Writing Business is a Great Passive Income Idea
With the success of my first book “How to Quit Your Job with Rental Properties” I was amazed to find another great way to earn passive income through writing books. It is very possible to earn enough income from writing books to quit your job.
Currently, my first e-book is making close to $800 a month in sales through Amazon.com, Audible.com and other sales avenues. Because of the success of this first book, I decided to write another book on a totally different subject.
Since February, I have been working on a marriage book that has been more of a labor of love for me then a desired to make passive income. Even though this book will make income for me, I am more excited about the marriages that I will hopefully help strengthen and build through what I’ve written.
In May, I finally finished the writing process of my new book “Lasting Marriage”. It is fully edited and is now in the design phase, which is the last phase. This book is scheduled to be for sale on August 8th and I will sell it for $9.99 Kindle version and $14.99 for the paperback.
I already have four more books planned for this book series on marriage that I will hope to get all published within a 1 year time frame. As far as passive income, each one of these books should bring in at least $300 a month. With 5 books bringing in a conservative $200 a month would be an extra $1000 in passive income!
Finding New Rental Properties in Akron Where I make $900 a Month in Passive Income
The month of May has been a time of finding new properties in the Akron area of Ohio. If you’re patient and persistent, you can find a really good property that will be a solid rental in your portfolio.
I have found two in the month of May that I am purchasing.
Purchase Price: $21,000
Monthly Rent: $650
Monthly Expenses: $257.50
– Taxes: $115
– Insurance: $80
– Property Manager: $62.50
Total Income: $392.50
Purchase Price: $24,000
Monthly Rent: $750
Property Manager: $75
Total Monthly Income: $495
Almost $900 in net profits for two properties is a great investment of $45,000. What would make it even better is if I would pull out all of my money through refinancing and use it again to buy more properties.
A $45,000 note at 30 years with 4% interest is only $359 a month. The $900 in net income minus the mortgage payment of $359 is $541 a month in passive income with none of my own money in the deal!
Think about that. I buy two houses that make me $541 a month in passive income and not have any of my own money into the properties!
The monthly income is just one of five different ways that a rental properties make you money. For me, this is the most important because this is what our family lives on.
My goal is to find two more properties like these in the month of June. The four of these in Akron, and my most recent purchase in Maple Heights near Cleveland will be a great set of properties that I can bundle into one loan with one payment.
Once I refinance all five of these properties and pull out 100% of my money, I should make close to $1500 a month after expenses and mortgage payment. I will then do it all over again.
Each time I get more properties, I earn more money to buy more properties. It is a snowball effect that will continue to grow over time!
Things That I Recently Learned or Relearned…
A hard thing that all entrepreneurs must learn is the ability to have other people work for you. Most entrepreneurs can be control freaks and desire to do all the work themselves because they believe no one else can do as good of a job as they can.
If you’re going to get ahead in the game of passive income, you must learn a new skill of having other people work for you and trust them to do the work right.
For example, being thousands of miles away from where I buy my properties is very hard for me to find new rental properties just by looking through the MLS and Internet websites. I can find what look like good deals online but in reality are not.
I had been trying to find properties on my own through Zillow.com and the MLS in Akron and have not had the easiest time.
Many factors come up that the Internet will not show you. Things like the feel the neighborhood, the type of clientele you would rent to, the feel of the property, and how much it’s going to take to fix it up. There is nothing more valuable than a pair of eyes on the ground that you trust to look over the property in the area to make sure you are buying a good investment.
I spent a lot of time finding properties and it finally hit me. Why am I spending so much time on this. Why not just let realtors do it for me. So, I learned again that having realtors work hard for you is much better and save you loads of time. I personally have 3 to 4 realtors fining the properties in every area I invest. I also work with many wholesalers who find me deals on good rental properties.
I also have my property manager be the main person I trust to answer all my questions regarding a property. With his answers to my questions, I am able to make a decision if the property would be a good investment or not.
Process of Buying a Property Must be Followed or You will Lose Money
Recently, I paid for two home inspections on two different properties. The problem is that I did not have these properties under contract. The reason why you want a contact for you to purchase a property before you pay for an inspection is that you won’t lose the house to another buyer because you have it locked up. If the seller breaks the contract, you can sue them and they will lose a lot of money.
What I did was jumped over the process that I have put together for my business. One of the properties I am unable to buy because I did not have a contract on it. The other, I am buying so at least I did not lose all the money from those inspections.
Here is the process I put in place for my business:
- Find a property
- Have the Realtor go through the house to give me a ballpark figure on the costs to rehab the property
- Place the offer with the rehab numbers put into my offer amount AND a 7 day inspection period
- Get the contract signed by the seller
- Have my Property Manager inspect the property
- Pay a Home Inspector to inspect the property
- Proceed with the escrow if everything lines up properly
If you need a more detailed explanation of the process of a real estate transaction, you can check out my post on the nuts and bolts here.
Book Writing is Best When Freelancers Are Used to Make Your Book Great
I have also been using many freelancers on the books that I’ve been writing. The freelancers work hard to make my content very good and worth the price that I charge.
Both of these sites have their pros and cons and I use both to get where he done for my passive income businesses. Without these people, it would take me 10 times as long in the quality be not as good if I were to do it myself. I pay them well but they are worth what I paid.
My Future Business Plan for Quitting my Job
I am so close to quitting my job I can taste it. In reality I could quit right now but the only thing holding me back is that I need to refinance these five properties before I quit.
As I have mentioned many times it is much harder to get financing without income from a job. Banks look at a job as a steady source of income that would be used to repay the loan. Without having that steady stream of income, I need to have enough passive income each month in order to get the loan. Right now, even though I have enough money to live on with my current properties, I want to pull out all of my money so I can use it all over again.
I’m using the B.R.R.R.R. way of purchasing properties.
Here it is in a nutshell:
Buy a property for cash
Rehab the property
Rent the property
Refinance all the money out of it
Repeat the entire process again
All of these steps can be done over, and over, and over again until you are satisfied. I will probably double the amount of rental properties I have before I decide to stop this process. With 50 properties, I would be making around $20,000 a month in passive income.
From there, I’ll probably get into multifamily properties and grow my wealth exponentially.
How are you doing with your passive income investing? Let me know if you getting tripped up anywhere, I’d love to help.
See you next month!