Anyone has a side line of work, a business???
How do you manage to do it?
Is it even possible given the amount of work we have?
Any advice?
3 replies (most recent on top)
Serious response:
1) Buying rentals: This takes 10 to 15 years of cycle.
Steps: a) Live below your means. Save money for down payment for first rental (25%). The extra buffer in w-2 is used to finance the loan for remaining 75%.
b) Once you get the hang of how to select a rental, deal with tenant screening etc., the process is repeatable. Every few years, one can buy another rental and the cycle gets shorter as the income is accumulating (and the living standards is slow to rise)
c) This idea is not always doable. e.g. currently the math does not work as rental prices are high, interest rates are too high and rents are soft.
2) Buying / starting a business: This typically is done by supporting a spouse who is running the business.
Steps:
a) Buy a running business (very expensive (5x to 7x the annual profit), but 'assured' income stream.
b) Alternatively, buying a new franchise. the advantage with this is that it is cheaper than buying a running business there will be fewer novice mistakes - as the franchise has established processes from sourcing to marketing to hiring to reporting etc.
When calculating returns look for both return from the business + HEADACHE factor. This is because, as employees, we have limited time. e.g. Buying a fixer - upper will be a TIME disaster (unless you are a handyman) or buying a business with long hours, that is open everyday or is prone to customer theft.
3) Not a side gig - but a favorite: Dollar Cost average into a diversified portfolio.
Steps:
a) Maximize your 401k (preferably ROTH 401k), followed by ROTH IRA (or back door ROTH IRA).
b) Open a brokerage account and put all money left over from w-2, and above ideas.
c) Note: For 10 to 15 years, the growth (and the corpus) is so small, that it is honestly discouraging. After 15 years, however, the amounts start to be meaningful.
As you age (and have limited time/energy for side gigs), the third option works nicely as it becomes substantial and is very liquid.
All the 3 ideas are 10 to 15 years long, not easy, requires living below your means but have a reasonable chance of success. Others may have better ideas.
Wish fellow VZ mates the very best!
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