Broken air conditioners. Late rent. Evicting problem tenants. Replacing carpet torn up by dogs that were not even supposed to be in the apartment. After I bought my first investment property in 2002, those issues (and more) became a normal part of my life for over a decade.
And at the time, I wasn’t putting even a dime in my pocket. I had chosen to put 100% of the rents from the 13 units I eventually owned or co-owned back into the real estate.
I’ll be honest. It was a drag, especially during the great recession. Our tenants moved out, and we had to start dipping into our cash reserves to pay the mortgage. At that point, my partner wanted out. I believed it was the worst possible time to sell, and stuck it out, buying out his interest.
In 2018 & 2019 (that’s 17 years from the starting point, for anyone who is math-challenged), when the market had FINALLY rebounded, I sold the majority of my rentals. Because I had consistently put that money back into the real estate, they were paid off by that time. I deposited checks for almost $250,000 during those two years. That’s and amount equal to almost 6 years of take home pay from my teaching job. AND I still have about $1500 of passive income each month.
And that, my friends, is the power of the long game in side hustles.
I am all about side hustles that give you cash today, especially if you are trying to pay down debt. But once you are on firmer ground, the long game side hustles can be a source of very real wealth.
If you are interested in creating a side hustle that will pay off for years to come, there are certain things you need to understand or you will get discouraged. During the great recession, I saw a ton of people trying desperately to get out of real estate. They had an unrealistic idea of what the long game was, or maybe they didn’t realize the huge rewards they could get if they just stuck around.
So if you want to pay the long game, here are some lessons, insights, and pointers to give you a realistic idea of what that might mean.
Prepare for the worst, work for the best, and be happy with anything in the middle.
That’s not my idea. It’s a paraphrase of Maya Angelou. But it’s a pretty good idea of what to do if you are going to play the long game. Again, I’m going back to the great recession of 2007-2010ish, because that was a huge moment in real estate. A moment when a lot of investors lost everything.
Unfortunately, my sister and I bough 4 units shortly before the big downturn. But fortunately, we bought them with that ‘prepare for the worst’ idea in mind. Instead of putting down only 10%, or even less – like some people encourage you to do, we put down over 20% and made sure that we could cover the mortgage out of our own salaries if need be. We also didn’t take any money out of the real estate. In other words, for the two years or so during which we were actually making money each month, whatever was left over after paying the bills just sat in our bank account and grew until we needed it.
And need it we did. That extra money was a lifesaver. At one point, we had 3 out of 4 units unoccupied. That’s pretty unheard of, but our small town was really hit hard. To translate into dollars and sense, we had about $500 a month coming in, and a mortgage payment of $1040, not to mention water bills, property taxes and any other expenses. But we used that money we had saved up when times were good, and we knew that even if we burned through that, we would be able to cover it from our own incomes. So yes, we did have a backup plan for our backup plan.
If you are going to play the long game, remember that it is a LONG game. Don’t check the score every 10 minutes.
When I bought those first apartments in 2002, my plan was for them to pay for my kids’ college. Yeah, I didn’t have kids yet, so even going in, I knew it was the long game.
Knowing I was playing the long game helped me to remember that I wasn’t worried about what happened over a year or two years. I was looking at the 20-year time frame. So when the taxes were higher than I expected or we had a tenant who really tore up the apartment and we had to put a ton of money back into it, I wasn’t as likely to freak out. I knew that those things happen, and I knew it would even out over time.
The other thing that keeping the long game in mind helped me to do was NOT sell out at a loss. No shade for my partner. He made his decision based on his life at the time and what his goals were right then. But he did choose to sell out just as the market hit pretty much its low point. We weren’t making money that year. We were losing money. And he just kept seeing it go down the drain. So he sold his share out to me at a loss.
I knew we were losing money that year, but I also knew I wasn’t worried about that year. I was looking at the long game. So about 4 years after he sold out to me at a price equivalent to $150K, I sold 5 of the 6 units for $230K. I still have one of those units that pays me about $500/month.
That’s the power of knowing that you are playing the long game. It keeps you from messing things up for yourself because of what is happening in the moment.
Business is a snowball
When you are playing a ‘long game’ it is often like rolling a huge, huge boulder. At first, even a tiny bit of movement takes incredible effort. You push and strain and push some more just to move that massive rock a centimetre. But once it is moving, if you keep exerting that same amount of effort, it moves a bit faster. And then a bit faster. And then a bit faster. Suddenly, you look up and realize that you really couldn’t stop that boulder if you tried. (I would advise you NOT to try.) The cumulative efforts that you have put into rolling that rock are now allowing you to work a bit less hard and still keep the rock moving.
This concept applies to real estate (look at a chart showing how much principle is paid off each year of a mortgage), but to getting clients, building a brand, and a million other business processes, as well.
When I started my language teaching business, I had to hustle my butt off to get ANY traction, ANY forward motion. To get my first preschool class, I probably had to make 20 calls and teach 15 free class sessions for exposure. My second one was easier. And on it went from there. Even a full year after I sold my business, I actually had people contacting me for language teaching because they had heard of my business through word of mouth.
But you will never get to that point if you don’t do the hard pushing in the beginning OR if you get discouraged because things just don’t seem to be moving as fast as they should for all of the work you have put in.
And right at the moment I’m writing this, I am SO right there with you. I’ve set up my web site, written over 30 blog posts, created more Interest pins than I ever wanted to, and taken several courses on blogging. Have I made a penny? No, I have not. But I’m not quitting, because I know that you never get where you want to go if you quit. And you watch this space, cause big things are coming.
If you are playing the long game, I’m right there with you. It’s not going to be easy, but if we keep at it, it WILL be worth it. Hang in there, cause we’ve got this!
I frustrate my mother, as I’m sure all of us do for a million different reasons. My particular reason is because I do too much. Always trying another projector side hustle. Always biting off more than I can chew. Well, we all have our flaws, and that is one (among many) of mine.
So if you are worried because you just don’t know what side hustle will work for you, I’m here to tell you that you don’t have to choose just one. Different side hustles are right not only for different people, but also for the same person at different times in their life.
My first side hustle (after the age of 10) was a multi-level marketing company. If you have found or are hoping to find success in MLM, I wish you all the luck. With that said, it wasn’t for me. I did all the things one was supposed to do, but some companies just aren’t quality companies, and I finally cut my losses.
However, my MLM experience probably taught me the #1 most important lesson for success in money AND in life: feed your mind and control your mind. As most MLM companies, mine offered extensive ‘professional development’ in the form of conferences, CDs, books, and seminars. Eager to succeed, I dived right in. I read and listened to some of the top names in personal development: Earl Nightingale, Zig Ziglar, Dale Carnegie. They led me to other motivational thinkers like Marie Forleo, Tony Robbins, Jack Canfield.
I don’t pretend to have things 100% figured out. I get in funks like everyone else. But most of the big things that I have accomplished in life have been possible because I kept going. And how did I keep going? By feeding my mind a constant diet of encouragement and focus.
Almost 15 years ago, I broke off an engagement and gave up on the idea of getting married. But I knew with 100% clarity that I wanted to be a mom. With an adopted sister who has taught me more things than I can tell, adoption was an easy choice for me.
What wasn’t easy was the adoption process. I spent 19 months assembling documents, reading about adoption, assembling the necessary funds on a teacher’s salary, and a hundred other things. Oh, and doing them all as a single woman.
Through all the headaches and heartbreaks, I had tremendous support from family and friends. But I also made a conscious choice to keep my mind right. I listened to leftover tapes and CDs from the MLM. I continued to read books.
Ten years later, my husband (so much for giving up on marriage) and I decided to move to Norway. Again, it took focus over time. Over two years after starting the process, we finally settled in Stavanger, Norway. (For more info on life in Norway, you can check out my lifestyle blog here.)
This time, keeping my mind right was a little different. It involved looking daily at housing, checking facts, reading the posts in Facebook groups, and changing my password to NORWAY2018, so I would remember several times a day where I was headed.
Even though I didn’t make millions (or even hundreds) in the MLM, in a very real way, that first side hustle made it possible for me to follow my dream all the way to motherhood and Norway. Life isn’t perfect, but I am loving my life in so many ways. And I don’t really think I would be here if I hadn’t had that lesson from my MLM experience.
If you have big dreams, especially big dreams that are going to take a long time to realize, get your mind right. Find a podcast or two that wlll continually point you where you want to go. Watch Youtube videos, read books. Whatever works for you. But you need to find a way to keep that dream front and center.
Why? Because you’ve got to find a hundred different ways to remember what I am always telling you: You’ve got this.
I am a personal finance nerd. If you have been reading this blog for any length of time at all, you probably know that. But I realized recently that I haven’t really explained much about multiple streams of income and why I am totally committed to this idea.
What does multiple streams of income even mean?
Multiple streams of income became kind of a buzz word during the 1990s when Robert Allen published a series of books on different angles of this concept. The basic idea is that people who are wealthy often don’t rely on a single income source. They might. For example, a family in which there is one high income-earning spouse who brings home income and the other spouse does not contribute to income earning at all. However, in order to TRULY not have more than one stream of income, they would have to have no investments in dividend earning stocks, no income real estate, absolutely no other sources of income. That is actually pretty rare.
On the other hand, a family that had 2 income sources would be a family in which both spouses earned income, OR one spouse earned income AND they had some other source of income, like an apartment they rented out, or a bedroom they used for AirBNB.
It has been over 15 years now since I have truly had only one source of income, and it’s pretty clear I’ll never go back.
Why I love multiple streams of income.
In two words: freedom and security. I know those are two words that are often used as opposites, but if you have multiple streams of income (and you have chosen them well), you get them both.
First, multiple income streams can provide security that no single income source can. You’ve heard the old saying about putting all your eggs in one basket? Well, that’s what you are doing if you have only one income source. Unfortunately, if that one source goes away, you have no income.
A lot of people who thought that their jobs were incredibly secure before the Corona Virus pandemic have lost their income because their job can’t be done without face-to-face contact and it is not considered ‘essential.’ While it is true that a lot of people’s side hustles have taken a huge hit, as well, having multiple sources of income means that the chances that you will still receive SOME income are greatly increased. And the more sources of income you have, the more likely that one of them will not only survive, but THRIVE during downturns.
So, security. Big, hairy, wonderful reason #1.
Freedom
Who doesn’t dream of freedom? Hopping from Greek isle to Greek isle sipping – well – whatever wonderful things they sip on Greek isles?
And if that is REALLY what you want, then absolutely, go for it! I’m cheering you on!
But freedom comes in many different flavors. Even an increase of $10K a year can give you so many more options. Options of where to live, where to eat, where to vacation. So yes, definitely short term, it gives you more freedom to have more income, and that is a great thing.
But it can also give you more freedom long-term, as well. My side hustles over the years (paired with other financially responsible decisions) put me in a position to grab my own personal dream when it came along. I’m writing this from Norway, where I now live with my family and teach part-time at an International school. In a couple of minutes, my train will run along the fjord, and I’ll be able to see the mountains on the other side of the sparkling water. Yup. To borrow from McDonalds, I’m LOVIN’ it!
But whether your long term dream involves Greek isles or Norwegian fjords, or just staying home with your own kiddos for a few years, multiple streams of income really increase the chances of you making those dreams a reality.
BUT, you must remember this.
So I’ve painted a pretty rosy picture of this multiple streams thing. And, that’s not hype. I totally believe that the more solid income streams you have, the more freedom and security you will built into your life. But there is a catch.
Some income streams actually LIMIT your freedom and security if you don’t use them well.
When I started my language teaching business, I forgot this rule. I saw an opening in the market because I knew that American parents wanted their preschool kids to learn Spanish. So I focused my energy there. My business was growing. But just about the time it started to really take off, my husband and I started seriously considering an overseas move. Since my business was location-dependent, I had to make a choice. And since I’ve already told you I’m writing this from Norway, I’ll bet you can figure out what the choice was.
As you think about multiple streams of income and how they can play a part in your life plan, remember: You’ve go this.
