My friend Andrew wants to build a passive income stream. He’s read countless books, attended seminars on how to create unlimited wealth and he has even tried following the false prophets of prosperity who either offer life on a tropical beach for only 4 hours of work per week or promise, you too can flip houses in your spare time. Yet, something was still holding him back from taking the first step and starting his journey.
Andrew knows that he can’t be a contractor forever. He comes from a long line of tradesmen in his close knit and extended family. His dad, his grandfather and numerous uncles and cousins are all in the building trades. He has observed that the body eventually gives out much sooner than the owner thinks it will and the value of the businesses that they create are in reality only worth the resale value of a few old trucks and used tools. He sees family around him that are approaching retirement and still live check to check and others that are dependent on their spouses for their futures. Andrew wants to write a different story for his retirement. He wants to own investment real estate and eventually create a stream of passive income.
He has saved a few thousand dollars and he is looking to find his first deal. He wants to jump in but can’t seem to find the right spot to do so. He’s also afraid deep down of what might happen and thinks of all the things that could and will go wrong. He has no idea of what to expect and doesn’t want to risk what little money he does have by getting in over his head. He talks about his dreams sometimes at family barbecues and gatherings and there plenty of naysayers that tell him that being a landlord sucks and it’s nothing but a headache. “Who wants to unclog a toilet at 2:00 A.M. on a Sunday?” He also hears stories from an uncle that tried owning multi families once and lost his proverbial shirt and warns him to stay away as to save him from a similar fate. Andy is conflicted.
Despite the fear and all the warnings from many around him, Andrew still wants to try. He has a few friends that own investment property and they are somehow making it work. He thinks that if they can do it then why not him too? He keeps looking and finally comes across a value add opportunity for a 2 family in a not so good section of a not so good town near his home. Although the location is not ideal, the price is right and it comes with an option for owner financing, so he decides to take the leap and just like that, Andrew is now writing a new story for himself, his future and dreams of retirement.
Not long after this story begins, our protagonist finds his first conflict and this is not what Andrew was expecting, but like any good story, our hero needs a conflict to overcome. After all, isn’t that what makes a story compelling and worthwhile? Who cares about a story that has no no adventure, challenge or bad guys? Andrew’s story has all of these elements and more. Shady contractors, stolen money, zoning battles, extortion, cash shortages, lawyers, fatigue, doubt, second mortgages, just to name a few.
Two years into his story and Andrew is not the same man he was when he started. After encountering and solving all the challenges and roadblocks that stood in his way, Andrew has changed. He has become enriched by the experience and that is the bigger lesson here. Just as the climber who sets off to conquer Everest finds out somewhere along the way that it’s not only about making it to the top. We often discover that the greatest value lies in what we experience through the process itself. The late Earl Shoaff who was the mentor to the late Jim Rohn, inspired Jim to strive to become a millionaire. Not for the money alone, but rather for who he would become and what he would learn through the process of trying to attain it.
Andrew is just shy of the mountain top now. There are still inspections, punchlists, tenants and refinancing obstacles to overcome and I’m confident he has what it takes to make it to the summit. I am also sure that the past 2 years has taught him invaluable lessons that will make the next chapter of his story not easier, but simply possible. You see, you can’t build a passive income stream with just one chapter, one deal or one property. For most of us it will take a lifetime to complete our passive income story if we decide write one at all. For just as chapter 2 follows chapter 1, you can’t buy your second building until you buy your first one and you won’t know how to overcome the inevitable obstacles and navigate the conflicts in your second deal until you face them in your first. This process will repeat until your story is finally complete.
Any journey towards building a passive income stream is going to be harrowing. If you are expecting an easy road then you will be disappointed and will meet failure swiftly. Expect pain and difficulty as a necessary element of the process and you too will have a fighting chance for success. Start first with a decision to write your passive income story and then sit down and write one sentence, then one paragraph and then one chapter at a time. When it’s finished, your story about your journey will be as unique and compelling as you are.