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How to Build Passive Income

My son, Josh Mettle, just interviewed me for his Physician Financial Success Podcast on iTunes.  I hope you give it a listen while you’re walking your dog, hiking or traveling up the coast 🙂  You will learn (among other things):

  • The kind of stuff they never teach you in real estate school.
  • What I learned from Donald Trump about picking up great properties.
  • How to bootstrap your way into income property investment.
  • How to weather the storm when markets move from good to bad to good again.
  • How to retire with cash flow.
  • How to start!

If you have a secret desire to bridge from the billable hour to passive income for life, this may help you get started.  Enjoy!

 

Links

Advice for Tenants

Home Sweet Home

A tenant asked me today why I didn’t have any advice for tenants at my blog.  That kind of stumped me, because this blog is for landlords.

But I actually do have some very important advice for tenants:  Buy a home.  Do it now.  Don’t wait.

Interest rates are going up, and you’ll be able to buy less and less home in the future because of the higher cost of money.

Home prices are increasing.

And rents are going way up.

You’re welcome.

 

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Highest Ever Rents Banked in 2014

Ka-Ching

A stunning $441 Billion was banked in rents in the U.S. in 2014, according to our friends at the KCM Blog.  This is a $20 Billion increase over the year before.

Zillow’s Chief Economist predicts that 2015 will be more of the same.

Read the whole story at the KCM Blog.

Photo credit: mcfcrandall via photopin cc

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“No Vacancies” A Landlord’s Favorite Words

No Vacancies sign

One thing you can count on in business (and in life) is change…so I thought I better show off real quick before something changes.

To start off this new year, we have 87 apartments with No Vacancies!!

I can’t even remember the last time that happened.

We do have one vacant house…but houses are a different business in our world so I can brag about the apartments separately.  (That’s my story and I’m sticking to it.)

We had huge turnover last summer.  We decided it was a perfect time to sell a few houses, so we asked a few long term month-to-month tenants to leave for that purpose.  Then suddenly we had some other long term tenants give us notices.   Gulp.

At one point last summer we had 8 vacant houses.  Eight.

Plus normal spring and summer apartment turnover.

So I was one stressed out lady when the cash/bills graphs got crossed (bills up, cash down).  Filling vacancies is always my absolute top priority, so I had little time to blog.  I’ll try to get in a little pontificating now.

Josh and I would like to add a new apartment complex this year, so I probably won’t be basking in the No Vacancies glow for long 🙂

Quotes

Warren Buffett on Gold vs. Income-Producing Investments

Warren BuffettThis is the best tutorial I’ve ever found on gold as an investment.  So I thought I’d share:

“Gold is a huge favorite of investors who fear almost all other assets, especially paper money.  But what motivates most gold purchasers is their belief that the ranks of the fearful will grow.

“The world’s gold stock is 170,000 metric tons.  If all of the gold were melded together, it would form a 68-foot cube – and fit in a baseball infield.  At $1,750 per ounce … [last year] its value would be $9.6 trillion.  Call this cube pile A. 

Now create pile B.  For 9.6 trillion, we could buy all U.S. cropland (400 million acres producing $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, earning more than $40 billion annually).  After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge).  Can you imagine an investor selecting pile A over pile B?”
[Photo credit: Fortune Live Media via photopin]

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Warren Buffet Digs Real Estate

Warren BuffetOur favorite 82-year old mid-western billionaire is sweet on real estate.  Whodathunkit?

Warren Buffet just branded “Berkshire Hathaway HomeServices.”  This new real estate franchise will be operational in 2013.

It looks like he’s positioning his new company front and center of the real estate recovery.

Get ready for the rocket ride!

Read more about it at the KCM Blog and Bloomberg.

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More Evidence of the Housing Recovery

Sherwin Williams Co. stock chartHow do stock market pro’s know the housing market is recovering?  They look at stocks like Sherwin Williams (SHW) because share prices of companies that offer housing-related goods and services are “on a tear.”

According to Jeff Clark who writes the “Market Notes” for Dr. Steve Sjuggerud’s Daily Wealth blog:

“As today’s chart shows, there’s a safer way to bet on the housing boom… Sherwin Williams (SHW) is one of the world’s largest paint and coating producers. The stock is in a “slow and steady” uptrend. Its share price has more than doubled in the last 12 months. And it just reached a new all-time high.”

As the housing market is recovering, some investors are buying real property and some investors are buying housing-related stocks.  It’s all good.

Links

How to Add an Extra $1 Million to Your Retirement Plan

chart: building wealth

“Make $1 million with 3 properties. Assumes the following for each property: a purchase price of $182,600, annual rent of $26,400 and annual expenses of $17,780.”

If you would like to add an extra $1 Million to your retirement plan, start today.  Buy one investment property:  a house, a duplex, a 4-plex, etc.  Just start.  Start with one.  Next year add another one.  Add another one on year three.

If you’re crazy like me, keep adding.

(I acquired 92 units because I have the greatest ever handymen, and I didn’t want them to find a new client.  I wanted to keep them busy.  They just kept renovating themselves out of a job as we added each new property…until we had/have almost no service requests.  True story.  My Mom finally asked me, “How many units are enough?”  I told her I never thought of it like that, I was just trying to keep Allen and Andy busy!)

The more units you acquire, the easier it gets.  You develop an “economy of scale” and your great helpers (handymen, landscapers, janitorial crew, bookkeeper, etc.) start to run like a watch.  I know you don’t believe me about this, yet.  But eventually you will.  (You can always hire the management out if you don’t find the game as exciting as I do.)

Interest rates are at an all time low.  Get out there, take a risk and add just one unit to your assets this year.  Then rinse and repeat next year.

Read the full CNN Money article here.

Happy investing, and happy retirement!

Video

Why taking risks is a good thing – Francis Ford Coppola