A 29-year-old American woman secured herself $ 19 thousand a month in passive income and retired: how she did it
By the end of 2020, then 28-year-old Rachel Richards had already surpassed her goal of earning $ 10 in passive income a month. She and her husband Andrew have been actively investing in real estate for years, which, along with other projects, brought in $ 000 a month for the couple. Grow
The income allowed Richards to quit his 9-5 job and retire early.
Richards admits that "retire early" is a bit of a slippery phrase.
“We either call ourselves retirees or financially independent — we use these terms interchangeably,” she says. "The point is that I work when, where and if I want."
In truth, Richards loves to work: she spent most of her years investing in real estate, writing two books, and starting a business.
Last year, she and her husband decided to curtail their activities a little.
“We got $ 16 in income a month, which was more than enough to cover our expenses, and we got to the point where we couldn't work that hard,” she says.
This meant selling most of the property and finding another, less practical way to invest. This did not mean sacrificing cash flow. In fact, these days, the couple's passive income projects bring them $ 19 a month.
Selling real estate "in order to make a good profit" as the cost of housing rises
Richards and her husband first began buying rental properties in 2017, each of whom contributed $ 10000 in savings to purchase their first property, a $ 100000 duplex in Louisville, Kentucky. Because she had a realtor's license, Richards earned a commission from the seller every time the couple took over the property - an agreement that allowed them to expand quickly.
By the end of 2018, they had acquired six properties totaling 38 units.
The couple operated three large buildings as boarding houses, renting out each room separately on a weekly basis. It was a profitable model, Richards said.
“We charged $ 130 to $ 150 per week in rent, including furnished rooms, Wi-Fi and utilities,” she says. - There is a huge demand for such housing - we can fill a house within 24 hours. Monthly rental income from one home worth $ 375 with 000 tenants was $ 11. "
Earlier this year, the couple decided to sell the boarding houses.
“We moved from Kentucky to Colorado, and at the time we were still self-managing our property,” says Richards. "In the end, we're tired of being homeowners."
What's more, she said, when house prices were rising, it was a good time to sell: “We realized we could make good profits and do something more passive.”
Immersion in "one of the most passive" types of real estate investments
The couple sold three of their largest properties. They made a relatively modest profit on two houses, which at the time of their acquisition were already equipped as boarding houses. Another, which they bought for $ 125 and refurbished and refurbished for another $ 000, sold for $ 40.
Rather than buying new property, Richards and her husband used the proceeds from the sale of their home to invest in syndicated real estate deals. A type of investment that involves a partnership of investors who pool their money to buy real estate and are then entitled to a commensurate share of the profits, including rental income and any cash generated from the sale of real estate.
The couple invested in two syndicates in 2020 and five more in 2021, each of which pays investors a monthly or quarterly installment payment.
Richards says these are complex investments that require both expertise from the people who manage them and careful consideration from the investors.
“You have to do your due diligence with the syndication and the syndicator,” she says. "It's very important that you work with someone who is legal and experienced."
You will most likely need a lot of changes to get started. Many such arrangements require you to be an accredited investor, which generally means that you must have a net worth of more than $ 1 million excluding your primary residence, or an annual income for at least two years in excess of $ 200000 for singles, or $ 300000 in joint income.
Richards says that once you're inside, you have far less worry than managing your own property.
“This is one of the most passive ways I've found to directly invest in and own a rental property,” she says. -Once you transfer funds, you will subsequently be able to enjoy all the benefits of ownership. The syndication team does everything, and you make a profit. "
Profit opportunities vary, as do the associated risks. While syndicators are spreading information outlining what they expect from the investment, both in terms of current income and when the property will eventually be sold, these are not guarantees. Depending on market conditions, you may be making less profit than you expected, and in a worst-case scenario, you could lose your initial investment altogether.
"We have achieved our passive income goals."
Syndicated loan income and the remaining four Louisville divisions generate about $ 4000 a month, but they are just a fraction of Richards' many passive income streams.
Richards' two books, Cash Honey and Passive Income, Aggressive Retirement, are self-published and sold on Amazon for $ 8000 a month. Richards' pre-recorded online course available on her website brings in about $ 6000 a month.
The couple makes about $ 1000 a month from sources such as investment interest and ad income.
Overall, their passive income projects generate about $ 22 in monthly income, which, net of expenses, is $ 000 in monthly profits.
This does not mean that they also do not strive for active earnings. Andrew still works full-time as director of cybersecurity and the couple could save 100% of his salary.
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“Obviously, having his health insurance is helpful, too,” says Richards. "When he wants to quit his job, he will get free medical care through VA, and I will pay for private medical care."
Richards is still working on new projects, having recently developed a boot camp for finding and analyzing rental properties and a course on achieving financial independence with real estate.
As for what she and her husband are now striving for.
“The vision hasn't changed much. We've met our passive income goals, says Richards. -Now it's about helping others, especially women, to do the same. I really want to help them feel secure about their financial future. I don’t know if this means more books, more courses or something like that, ”says Richards.
“I can try traveling a little more and try not to work too hard,” she adds.
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