I’ve been thinking a lot lately about how I can increase my income outside of my full-time desk job. The reason I want to build my income from other sources is so I can eventually quit my full-time job. I just don’t enjoy it and can’t imagine spending the next 30 years of my life sitting behind a desk. Plus, I’ve still got debt to pay off and very little savings to rely on if times got tough or I had an emergency. Extra income can be used to help fill all of these voids and more.
I’ve already tried a few different things, like selling products (anyone need any Mary Kay?!), taking on a part-time job on the weekend, cleaning my office building for extra pay, and now freelancing online. I’ve had mixed results with all of these methods. They all have pros and cons. The biggest con to all the things I’ve tried so far is that they all require me to put in time to achieve success.
Outside of money, time is the next most-limited resource I have. It’s hard to find the time and motivation to work on these projects during the evenings and on the weekends when I could/should be doing something fun and catching up on a little R&R or social time with friends.
With that said, I’ve been looking at different ways to increase my income passively, and one of the first things that came to mind is owning property and renting it out for a profit.
Just like the other things I’ve tried, this method of increasing my income would definitely have pros and cons. A pro of owning property is that it could pay the mortgage itself (if you do it right). Plus, you wouldn’t have to put in too much time into managing the property (again, if you do it right), making it a great source of passive income.
Another positive of owning and renting out property is that it is a long-term investment and could gain in value over the years. If you are able to purchase property while you are still fairly young, it could be a great resource to tap into when you get ready to fund your retirement.
One major con for me right now is that I would have to qualify for financing to purchase a rental property and that could be a challenge. It’s not I don’t have a high credit score, I do, but more that my debt to income ratio is quite high and I don’t know if I’d even be comfortable approaching a lender about borrowing the money for purchasing the property.
Another con I’ve considered is that you would likely need to have a separate, or else VERY large, emergency fund to help cover any potential losses or damage to your rental property. Taking on renters is an additional risk beyond living somewhere yourself. You know that you won’t intentionally damage your property, but that same can’t always be said for tenants. Of course, you should always obtain insurance on any property you own and this company is a great one to look at.
For now at least, owning rental property is probably not a viable option for me and my situation. It may be more feasible in the future, and until then I’ll continue to look for other ways to build a passive income to help me reach my goals.
Do you think owning rental property is a good source of (mostly) passive income? What other passive income ideas do you have?