Money
3 Bullshit Ideas About Passive Income
But plenty of others will tell you everything you want to hear
The topic of passive income is always hot, and I know a lot about this, since I have multiple “passive income” side hustles going. Let me lay some truth on you about how these really work.
Renting real estate
When we bought the house we currently live in back in 2008, we were unable to sell our previous house — you may remember the real estate bubble that popped that year. So we started renting it out instead.
Tenants typically believe landlords are rolling in cash. They think the entire rent payment is used on diamonds, furs and luxury vacations.
Actually, in my experience, about 110–150 percent of the rent payments go for the mortgage payment, insurance, property taxes and upkeep.
We formerly lived in the house we now rent out, and while we lived there we installed a brand new kitchen, bath and flooring, so it’s quite nice.
And we’ve taken pains to keep the house in tip-top shape. We are not the type of landlords who just suck money out of a place.
We’ve lost money on renting out that house pretty much every year. Our tenants have always had nicer vehicles and higher income than we have, but many of them don’t respect the property.
I was fortunate when Covid hit that the tenants I had at the time had just purchased a house of their own, leaving my house empty just when my son was ready to move out of the family home. So he became the new tenant.
If I’d been renting to anyone else, they’d have been able to avoid paying rent because of Covid, and without rental income, we could not have made the mortgage, insurance and tax payments.
The house would have been repossessed by the bank. I suspect that happened to lots of mom and pop landlords
My son was happy to move back into the house where he’d spent most of his teen years. We agreed on a fair rent, and he hasn’t, of course, trashed anything, so the money I normally have to spend on upkeep has been saved. He doesn’t want the responsibilities of home ownership, so it’s a win-win for everyone.
But until I actually finish paying off this house, it’s far from providing an income, especially passive income. At some point, either my husband and I will move back into it, as it’s a small house on one level and ideal for when we are older, or maybe my son will want to purchase it.
Otherwise, we will sell it. Renting to anyone other than my son was a nightmare and a money pit. I don’t recommend renting out houses for profit — it’s hard work.
You’ll get calls at all hours about problems, usually problems the tenant caused. My husband and I tried to handle these repairs ourselves whenever possible, since hiring professionals gets expensive.
We’ve had to come out to unclog a sink they dropped stuff into and check out outlet sparks caused by jewelry inserted into an outlet. The former tenants reported every few weeks that the furnace wasn’t working right, but it’s worked absolutely perfectly since my son moved in.
Huh.
Self-publishing ebooks on Amazon
I’ve written two different series of genre novels and have self-published them on Amazon.
My reviews are very good and my sales after each new release are decent, but you’re unlikely to sell many books without buying advertising from Amazon.
So that means you go to all the trouble of writing a full-length novel, purchasing a cover from a professional designer, learning to format the book or hiring that done, researching keywords and such — and then you pay the entity that has the book up for sale to promote it via advertising.
No wonder Jeff Bezos is so rich; authors really put some money into his pocket. He keeps a good percentage of every sale and charges you for the advertising. (You’d think he’d be embarrassed.)
A few authors really make bank, but most of us will publish and publish and publish and will have mixed results. I have also written a reader magnet to build up my newsletter subscriptions, and I keep up social media for my pen name.
Sure, the books I’ve written in the past continue to sell a few copies, but not unless I keep advertising and publishing new titles. It is not remotely passive, and to date I’ve not made much money at all on this.
(Still, if anybody wants to know what I’ve learned, hit me up. I will share my knowledge, for what it’s worth, which isn’t much.)
Copywriting
There are so many courses out there that claim there’s a fortune to be made in copywriting. I worked as a copywriter at an advertising agency for several years. It paid $20 per hour; hardly a fortune.
I do some freelance copywriting, but it’s feast or famine. If I were good at sales, I could pitch for new business, but it’s not often that the same people who have a talent for writing also have a talent for sales.
If you do, you’ll probably do better at making money from copywriting than I have. I have zero interest in making pitches to potential clients. I just want to write.
I found it very ironic that at one point I was writing website copy for a digital advertising company that offered SEO and SEM services about how SEO and SEM work.
They were selling themselves as experts on SEO and SEM but hired me to explain what they are. They were very good at selling but hired freelancers to do the actual work. I am sure they made the big bucks selling these services. I did not.
Huh.
There are, of course, some people who do make big bucks renting property, copywriting and writing books. But none of it is passive.
The best source of passive income I know is to be born into or to marry into a wealthy family. I completely failed at both of these, so I will continue to work for a living — and you will probably need to do so, too.
Sorry.
About Michelle Teheux
I’m a freelance copywriter from central Illinois. Find me on Twitter or LinkedIn.