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!