supplemental income

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Investing in real estate is always considered one of the best ways to build wealth.

Unfortunately, there are some drawbacks that make traditional real estate investments (like owning rental properties) challenging and prevent most people from trying.

The most significant challenges to owning properties are:

  • Capital – Many people who are interested in real investing don’t have the money needed for a down payment on a rental property.
  • Time requirements – Owning and managing rental properties can be a major commitment.

There are some ways to invest in real estate, however, that can produce passive income without the need to manage properties or deal with tenants.

In recent years, the growth of real estate crowdfunding has opened up many new opportunities for the average investor who wants to branch out into real estate.

Real Estate Crowdfunding: A Quick Overview

Real estate crowdfunding makes it possible for smaller investors to benefit from real estate without the need to deal with property management or many of the other issues that come along with being a landlord.

Real estate crowdfunding began with the JOBS Act of 2012, and in the past several years, more than 100 different websites/platforms have entered the industry.

Although many different companies fall under the classification of real estate crowdfunding, there are several different approaches and some major differences that you need to be aware of if you are considering investing.

What all real estate crowdfunding platforms have in common is the fact that they allow individual investors to participate in larger real estate deals without the need to manage the property.

Some platforms allow you to invest in specific properties or projects, while others allow you to invest in a portfolio of properties. Some focus on commercial properties or apartment buildings, and others focus on smaller residential properties.

As an investor, there is a lot to like about the opportunities that are available. If you’re looking for an investment that has the capability to produce passive income, real estate crowdfunding is something that you should consider. Regardless of whether you are looking for an investment that can produce income during retirement or whether you want to reinvest to grow your wealth faster, there is a lot to like.

For a much more detailed look, see Kevin’s article Ultimate Guide to Real Estate Crowdfunding: What it is and Where Can I Invest?

Aren’t Rental Properties Sources of Passive Income?

With all of the talk about passive income, you may be wondering why crowdfunding would be preferable over directly owning rental properties. After all, owning rental properties is often listed as a great way to earn passive income.

While owning rental properties is a proven and time-tested way to build wealth, it can take a significant commitment in terms of your time and attention.

As a landlord, you may not always need to put in a lot of time, but you’ll have very little control over when you are needed.

If a tenant has a plumbing leak on a holiday weekend, you’re probably the first person they will call. You’re responsible for everything that needs to be done with the property, and that can be a big responsibility.

On top of maintenance and repairs, you may also have to deal with tenants who pay late, or not at all. Chasing down late payments or working through an eviction process can take a lot of your time.

Yes, it’s possible to hire a property manager to handle a lot of the details, but that will cut into your profit and it won’t totally remove the responsibility from yourself.

On the other hand, crowdfunding offers a truly passive way for you to invest in real estate.

Andrew Herrig owns multiple rental properties and also invests through real estate crowdfunding platforms (he also blogs at Wealthy Nickel). On the subject of passive income from real estate, Andrew dispels the notion of the truly passive rental property.

“As a real estate investor who owns a portfolio of rental properties, I also put some of my money into real estate crowdfunding. While many people talk about rentals as being a passive investment, that has not been my experience. Even if you have a property manager, you still have to manage the manager and get involved in making decisions on placing tenants or paying for repairs or upgrades. Real estate crowdfunding provides truly passive income (aside from the due diligence you need to do on the deal sponsor). I am constantly evaluating my real estate portfolio to see where it makes sense to convert an active rental property investment into a passive crowdfunding investment. If in a particular scenario I can get similar returns from crowdfunding, it’s a no-brainer to invest there instead.”

Generating Passive Income from Crowdfunding

If you’re intrigued by the possibilities, you may be wondering how to get started.

Here is a look at the steps you can take to start generating passive income through real estate crowdfunding.

Are You An Accredited Investor?

The first thing you need to know is, are you an accredited investor?

To qualify as an accredited investor you will need to have a net worth of at least $1 million (excluding your primary residence), or you’ll need an income of at least $200,000 (for single filers) or $300,000 (for joint filers) for the past two years.

If you don’t meet those qualifications, don’t worry. Some real estate crowdfunding platforms are only available to accredited investors, but others are available to all investors. Some have options for accredited investors and non-accredited investors alike.

Accredited investors will definitely have more options (see our table below), but there are plenty of good options that are accessible to anyone. But it’s important to know if you qualify as an accredited investor, because it will determine what options are available to you.

Options For Non-Accredited Investors

For those who are not accredited, some of the best options include:

Fundrise

Invest in a portfolio of properties through Fundrise. You can choose their Starter Portfolio, or one of their three Core Plans: Supplemental Income, Balanced Investing, or Long-Term Growth. The Core Plans allow you to choose an approach that fits well with your own situation and needs. Read our full Fundrise review here.

DiversyFund

DiversyFund provides investors with the ability to diversify some of their holdings into commercial real estate, while the $500 minimum investment for non-accredited investors is a definite plus.

DiversyFund is different from most other real estate crowdfunding platforms in that their REIT actually owns the properties held in the trust. They buy, manage – and when necessary – sell properties in the trust.

You can expect a 7% preferred return before DiversyFund receives any profit split. Then investors earn 65% of the cash flow profits above the 7%. Once investors have made 12% per year, any remaining profits are split 50/50 between investors and DiversyFund.

Read our full DiversyFund review here.

Modiv

Modiv currently offers two different REITs that are open to all investors. Read our full Modiv review here.

Groundfloor

Groundfloor is one of the few crowdfunding platforms that is open to non-accredited investors and facilitates investment in specific properties. The investments through Groundfloor are short-term (usually 6-12 months) and return 5% – 25% interest. The investments are used by flippers and you’ll be able to pick the exact projects that you want to invest in.

How Do You Want To Invest?

Do you want to invest in a portfolio of properties, or do you prefer to invest in individual properties that you handpick?

By investing in a portfolio of properties you can get started very quickly without the need to vet or research the individual properties or projects. You can create an account, fund it, and start investing right away. It’s a low-maintenance, long-term investment that is ideal for generating passive income. An example would be investing in any of the options offered by Fundrise (their Starter Portfolio or any of their Core Plans).

The other option is to choose the specific properties and projects that you want to invest in. If you are not an accredited investor, Groundfloor is basically your only option for picking individual properties, and they focus only on flips of residential properties. If you’re an accredited investor, you’ll have far more options here. For example, you could use PeerStreet to invest in individual loans or use EquityMultiple to invest in large commercial or residential properties. You can use FarmTogether to invest in tracts of farmland, a surprisingly good investment over the past 50 years.

Once you know if you are an accredited investor and you know the type of investment you want to make, you can quickly narrow down the possibilities and find the best investment for you.

How Much Are You Willing/Able To Invest?

Each platform will have specific requirements related to minimum investments. In some cases, the minimum can vary based on the specific investment that you choose.

Most of the platforms that allow investments from non-accredited investors have lower minimums in order to make the investments realistic for more people. But many of the platforms that are open only to accredited investors will have minimum investments in the $1,000 – $10,000 range.

If you see high minimum investments at a few platforms, don’t be discouraged. Here are the minimums at some of the top platforms:

Do You Want To Reinvest Dividends?

Although we’re talking about passive income, you could choose to reinvest. If you don’t currently need the money, reinvesting will allow your investment to grow much faster and larger.

This is especially easy if you are using the portfolio approach. For example, Fundrise investors have a setting in the dashboard that allows you to easily control whether your dividends are paid out to you as cash or reinvested. You can set it to reinvest and then easily change it in the future whenever you want.

If you are investing in individual properties or projects, you probably won’t have the option to reinvest automatically. Instead, you’ll need to choose new investments to invest in.

Recommendations For Getting Started

If you’re new to crowdfunding or real estate investing in general, the portfolio approach is definitely the easiest way to get started (it’s also the option that is most accessible to non-accredited investors).

You’ll need to choose the crowdfunding platform that you want to invest with, make sure you can meet the minimum investment, create your account, and fund it.

This is a long-term type of investment and you need to be aware that your investment is unlikely to be liquid. Be sure to check the details related to liquidity before you invest, but in general, this is not an appropriate investment if you might need the money within the next few years.

Invest In A Portfolio Of Properties

A few recommendations if you want to take the portfolio approach:

Fundrise – Fundrise is a great entry point to the world of real estate crowdfunding. It’s open to all investors, has a relatively low minimum investment of $500 (for the Starter Portfolio – the Core Plans have a minimum investment of $1,000), and doesn’t require you to vet any specific properties or projects.

RealtyMogul – RealtyMogul offers a few different types of investments. Accredited investors are able to invest in individual properties, but they also offer public, non-traded REITs that are open to non-accredited investors.

Modiv – Modiv also offers anyone the opportunity to invest in REITs, making it a quick and easy way to start.

Invest In Individual Properties

If you prefer to invest in individual properties, here are a few excellent options:

Groundfloor – As was mentioned earlier, Groundfloor is pretty much the only platform that allows non-accredited investors the option to invest in individual properties.

PeerStreet – PeerStreet is a marketplace where accredited investors can invest in private real estate loans. You can create an account and view the available investments.

FarmTogether – is a crowdfunding platform that invests exclusively in farmland. Farmland has been one of the best and most reliable investments over the past 50 years. They shoot for an annualized investment return of between 8% and 15%.

Other Ways to Invest in Real Estate Passively

Although crowdfunding offers a great way to generate passive income from real estate, there are a few other options that offer many of the same benefits without the need to manage the property yourself.

Public REITs

Public REITs can either be traded or non-traded. Publically traded REITs are probably the most liquid of all real estate investments since they can be bought or sold at any time, however, the returns tend to be lower.

Public non-traded REITs meet the requirements of the SEC, but they are not traded on an exchange, which means they tend to be illiquid.

Some of the crowdfunding platforms that were mentioned in this article offer REITs, but you can also invest in REITs in many other ways. If you have an existing account with Vanguard or Fidelity, you can very easily start investing in REITs.

Mutual Funds and ETFs

While REITs invest in real estate, REIT ETFs invest in multiple REITs. There are also many mutual funds that focus on real estate. Like other mutual funds and ETFs, these investments offer liquidity, so you’re not looked into a long-term investment.

Crowdfunding Site Fees Account Minimum Accredited Investor Review
* Groundfloor None $10 No Review
* DiversyFund None $500 No Review
* Fundrise 1%/year $500 No Review
* RealtyMogul 0.30% – 0.50%/year $5,000 No Review
* stREITwise 3% up front fee, 2% annual management fee. $1,000 No Review
* FarmTogether Intake fee of between 0.5% and 1.0%. 1% annual management fee. $10,000 Yes Review
CrowdStreet None $10,000 Yes Review
Yieldstreet 1-4%/year $2500 No
Equity Multiple 0.5% service charge + 10% of all profits $5,000 Yes Review
PeerStreet 0.25% – 1.0% setup fee $1,000 Yes Review
Sharestates 0-2% setup fee $1,000 Yes
Patch of Land 0-3% of loan total $1,000 Yes
Modiv None $1000 Yes Review
RealCrowd None $5,000 Yes
Cadre Intake fee of between 1-3%. 1.5-2% annual management fee. $25,000 Yes Review

Related Posts

Source: biblemoneymatters.com

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Real estate is a popular investment for several reasons, including the ability to generate online cash flow through rental income and the possibility for appreciation to increase the value of the investment over the long run.

When you think about investing in real estate, you probably think about owning rental properties and becoming a landlord.

Unfortunately, managing rental properties can require a lot of work and headaches, so many people choose not to go down this path.

Thankfully there are other ways to invest in real estate and get the perks without requiring you to become a landlord.

These hands-off real estate investments can be perfect for adding some diversification to your portfolio, or for serving as an introduction to the world of real estate investing.

If you’re interested in real estate as an investment but you don’t have the time or desire to manage properties and deal with tenants, here are 4 options that you can consider.

1. REITs

Through a real estate investment trust (REIT), investors can buy shares in real estate portfolios. REITs may own office buildings, retail properties, apartment complexes, hotels, and any other type of property. Most REITs specialize in a particular type of property, so there is a great deal of variety that is available to investors.

The REIT collects rent from tenants and then distributes the income to shareholders in the form of dividends.

REITs can be:

  • Publicly traded – listed on a national securities exchange where shares can be bought or sold, and regulated by the SEC.
  • Public but non-traded – not traded on a national securities exchange, but registered with the SEC.
  • Private – not traded on a national securities exchange and not registered with the SEC.

There are some significant differences between these types of REITs. One of the most important issues to consider is liquidity. Publicly traded REITs can be bought or sold easily, so liquidity is not an issue. However, non-traded REITs lack liquidity and you may need to hold the investment for at least few years. The specifics will vary from one REIT to another, but liquidity is something that should be considered when you are researching your options.

Although non-traded REITs may lack liquidity, they can make up for the lack of flexibility with higher returns. Of course, the performance will vary from one REIT to another, but the main reason to consider a non-traded REIT over a publicly traded REIT would be for the possibility of higher returns.

If you decide that a REIT may be the right type of investment for you, you’ll have plenty of options. See this list of the best REITs for 2019.

2. Real Estate Crowdfunding

Real estate crowdfunding was made possible by the passing of the JOBS Act in 2012. Like investing in a REIT, investing through a crowdfunding platform allows you to get many of the perks of real estate investing without the responsibilities of owning or managing property.

There are many different types and varieties of crowdfunding platforms, but they all allow investors to have an ownership interest with much smaller investments as compared to buying properties on your own.

Many crowdfunding platforms are open only to accredited investors, but there are several that are open to all investors.

To qualify as an accredited investor, you will need an annual income of at least $200,000 ($300,000 for joint filers) or a net worth of at least $1 million, excluding your primary residence.

It’s important to know if you qualify as an accredited investor because it will determine which crowdfunding platforms are available to you. But don’t worry if you’re not an accredited investor, there are still several good options, and we’ll look at them in just a minute.

Like REITs, crowdfunding platforms also tend to specialize, and there are platforms for all different types of real estate.

Some crowdfunding platforms allow you to invest in individual properties, where you can choose the specific investments, and others involve investing in a portfolio of properties.

Here are some of the leading real estate crowdfunding platforms.

Fundrise

Fundrise is one of the most popular crowdfunding platforms and it is open to all investors, regardless of whether you are accredited or non-accredited.

There is a minimum investment of $500, and it’s very quick and easy to get started. With the $500 investment, you can invest in their Starter Portfolio, which includes investment in apartment complexes, single-family rental homes, and commercial properties. Some of their projects are renovations and others are new construction.

Aside from the Starter Portfolio, Fundrise also offers 3 different Core Plans: Supplemental Income, Balanced Investing, and Long-Term Growth.

Fundrise lists historical annual returns of 8.7% – 12.4%.

Learn more in our Fundrise review.

Groundfloor

Groundfloor is a very unique platform. It is one of the only options for non-accredited investors to invest in individual projects, as opposed to the portfolio approach used by others, like Fundrise.

Groundfloor allows house flippers to get loans in a peer-to-peer lending style. As an investor, you can choose the exact projects that you want to invest in.

The investments through Groundfloor are short-term, typically 6-12 months, and they claim to produce 10% returns on average.

The minimum investment is just $10, which makes it accessible to anyone. All you need to do is pick the projects that you want to invest in, and get started.

You can view the details of each project, like the grade, interest rate, projected term, and loan to value.

To learn more, see our Groundfloor review.

DiversyFund

DiversyFund provides investors with the opportunity to diversify their holdings into a sector that has traditionally done very well, commercial real estate.

The minimum investment is only $500, and the fact that non-accredited investors can invest with them is a definite bonus.

DiversyFund is different from most other real estate crowdfunding platforms in that their REIT actually owns the multi-family apartment properties held in the trust. They buy, manage – and when necessary – sell properties in the trust.

You can expect a 7% preferred return before DiversyFund receives any profit split. Then investors earn 65% of the cash flow profits above the 7%. Once investors have made 12% per year, any remaining profits are split 50/50 between investors and DiversyFund.

To learn more, read our full DiversyFund review here.

RealtyMogul

RealtyMogul offers a few different types of investments, including individual properties and public non-traded REITs.

You’ll need to be an accredited investor in order to invest in the individual properties. These investments typically range from 3-7 years and require minimum investments from $15,000 – $50,000.

However, the REITs are open to all investors, but they do require a minimum investment of $5,000.

To learn more, see our RealtyMogul review.

Rich Uncles

Rich Uncles may be a great option for getting started with real estate because it is open to all investors, and because they have an incredibly-low minimum investment of just $5.

Like Fundrise, Rich Uncles takes a portfolio approach. You can invest in Rich Uncles through one of their REITs. They currently have two different REITs available, the BRIX REIT (student and multi-family housing, restaurants, convenience stores, and fitness centers) and the NNN REIT (single-tenant office, industrial and retail properties).

The BRIX REIT has an estimated annualized dividend of 6% and the NNN REIT has an estimated annualized dividend of 7%.

PeerStreet

Unlike the other platforms we’ve covered so far, PeerStreet is available only to accredited investors.

PeerStreet allows you to invest in private real estate loans with historical returns at 6-9%, with 6-36 month terms.

You’ll be able to pick the specific loans that you want to invest in, and you can invest a minimum of $1,000 per note.

To learn more, see our PeerStreet Review.

EquityMultiple

Like PeerStreet, EquityMultiple is an option only for accredited investors. Through EquityMultiple, you will be able to invest in commercial properties, and you’ll choose the specific projects that you want to invest in.

The investments will be in commercial real estate, with a minimum investment of $5,000. You can invest in syndicated debt, preferred equity, or equity.

Read our full review of EquityMultiple.

FarmTogether

FarmTogether is also only for accredited investors. It’s a bit different from the others in that it allows you to invest specifically in farmland properties.

Based in San Francisco, California, the company is relatively new but already has over $1 billion invested in farmland through their platform.

Farmland is a true alternative investment, one that is an actual physical commodity and that is an uncorrelated asset. It often maintains it’s value while stocks, bonds and real estate show sharp drops. Since 1972 it has outperformed every other major asset class!

FarmTogether aims to have annual returns of between 8%-15%, including yearly cash payouts of between 3%-9%.

The investments in farmland have a minimum investment of anywhere from $10,000-$25,000.

Read our full FarmTogether review here.

For a more in-depth look at the subject of real estate crowdfunding, please read Kevin’s Ultimate Guide to Real Estate Crowdfunding.

Crowdfunding Site Fees Account Minimum Accredited Investor Review
* Groundfloor None $10 No Review
* DiversyFund None $500 No Review
* Fundrise 1%/year $500 No Review
* RealtyMogul 0.30% – 0.50%/year $5,000 No Review
* stREITwise 3% up front fee, 2% annual management fee. $1,000 No Review
* FarmTogether Intake fee of between 0.5% and 1.0%. 1% annual management fee. $10,000 Yes Review
CrowdStreet None $10,000 Yes Review
Yieldstreet 1-4%/year $2500 No
Equity Multiple 0.5% service charge + 10% of all profits $5,000 Yes Review
PeerStreet 0.25% – 1.0% setup fee $1,000 Yes Review
Sharestates 0-2% setup fee $1,000 Yes
Patch of Land 0-3% of loan total $1,000 Yes
Modiv None $1000 Yes Review
RealCrowd None $5,000 Yes
Cadre Intake fee of between 1-3%. 1.5-2% annual management fee. $25,000 Yes Review

3. Mutual Funds And ETFs

While REITs invest in real estate, there are mutual funds and ETFs that invest in REITs, which essentially allows you to spread your investment across several different REITs.

Likewise, there are also ETFs that invest in REITs.

Because mutual funds and ETFs are quick and easy to buy and sell, this presents a very easy option for getting started quickly. If you already have account somewhere like Vanguard or Fidelity, you can easily find a number of options.

This article covers a number of the best real estate mutual funds, and this article covers the best real estate ETFs.

4. Invest In The Industry

The last option that we’ll look at is to invest in the industry. This may be considered an indirect way to invest in real estate, but it could be a good option, depending on your situation.

You can buy stock of business in construction and other real estate types of industries. It’s a different approach than investing in rental properties or commercial properties, but your investment will be influenced by the real estate market as a whole.

There Are Lots Of Real Estate Investing Opportunities

Real estate presents plenty of different investment opportunities.

If you’ve never really considered investing in real estate because you don’t want to own rental properties or be a landlord, you may want to look at these options discussed in this article.

The options listed can provide an excellent introduction to real estate without putting any extra burden or commitments on yourself.

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Source: biblemoneymatters.com

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Could you pay your mortgage, groceries, rent, insurance, medical expenses, and other bills on $2000/month? If you could, what kind of lifestyle might you lead?

Millions of retirees across America live it every day.

The Social Security Administration reports that 50% of elderly married beneficiaries and 70% of singles rely on Social Security for more than half of their monthly income. Considering that the average Social Security check is around $1361/month, this is a really tough place to be in for so many of these retirees.

And I’ve met them. Many of them.

Every year at my insurance agency, we meet thousands of baby boomers aging into Medicare at 65. We often see their shock, dismay, and confusion when they realize that the cost of their healthcare in retirement will easily eat up at least 20% to 30% of that Social Security check every month.

No matter how you slice it, even the best of the retiree budgeters out there are likely to have trouble making ends meet on Social Security income alone.

Sometimes when it comes to personal finance, budgeting isn’t the problem.

Sometimes income is the problem.

Fortunately, there’s good news on that front, because we live in an age where there are more opportunities to earn extra money than ever before. Our digital world has made this possible, and it couldn’t have come at a better time.

When you’re on a fixed income and struggling to make ends meet, a side hustle that pays you even a few hundred dollars a month can be a tremendous help.

At Boomer Benefits, we polled our Facebook fans – largely baby boomers and seniors – to ask what kind of side-hustles they are rocking out there in the real world. What we learned is that there’s a wide array of ways in which creative retirees are supplementing their Social Security income.

 

Today, I’ll share a few of their stories to give you some ideas for your own possible side-hustle that could potentially help to reduce financial worry and afford you a better lifestyle in retirement.

Teach From Home

Did you know that you can get paid to teach English without leaving your house? That’s right, and this is a perfect example of a retirement side hustle that exists today that would not have been possible ten years ago.

Valerie Heidel shared with us that she uses an online teaching platform called Cambly to teach English to students in Saudi Arabia, China, Japan, and even Brazil. She found this job opportunity by searching online for work from home part-time jobs. This work-from-home part was a must so that she could make her own schedule and work only when she feels like it.

What was also important to Valerie in finding a side hustle was the sense of purpose and productivity. And, because she has quite a few repeat weekly students, the job gives her spending cash. She earns $0.17 per minute that she is online with a student, which comes out to $10.20/hour.

Not bad for a job that doesn’t require her to leave her house. And this part-time gig doesn’t require a degree either. You can be approved for teaching gigs like this one in as little as two days (although for some applicants it can take up to two months).

Another retiree we spoke with shared how she used her part-time teaching income to transition into retirement. Our client Nancy was teaching full-time at one college while also teaching health courses part-time online as an adjunct instructor. When she was laid off from her full-time job unexpectedly, she was able to transition into semi-retirement by keeping the part-time health teaching.

J.D.’s note: When Kim’s father retired from teaching high-school English, he too picked up some extra cash by teaching college-level English classes online.

Nancy shared that she has a physical disability which would make it difficult for her to teach in a classroom or report to an office for work. The ability to teach right from her laptop through the school’s Learning Management System has even allowed her to work when she was hospitalized. Once the courses are created, her main duties are to respond to emails and grade assignments.

She loves that it keeps her active and says that she would be bored without this job, so she plans to continue teaching for as long as she possibly can.

Nancy shared that she and her spouse currently use her part-time income to supplement their Social Security income benefits so that they can avoid dipping into their retirement savings for as long as possible.

Takeaway: Nearly everyone has a skill that they could turn into a tutoring, teaching or mentorship position. In addition to Cambly, you can check for opportunities that fit your skills at sites like Tutor, Skooli, and Yup.

Turn Your Passion into Part-Time Income

Jeanine Handley has been a creative artist all her life and worked in graphic design. Now that she’s retired, she does remote graphic design work for clients out of her own home.

She’s also managed to turn this passion into a business right in her own neighborhood. Several years ago, when she relocated to Florida, she moved into a 55+ community. Many of the residents there are active seniors who want to learn and explore new things in their own retirement.

Jeanine noticed that many residents didn’t know how to use the camera and editing features on their smartphones. She helped one woman in her eighties with picking out a new smartphone and iPad and began weekly lessons to show her how to use both.

This blossomed into a course there in the community in which Jeanine helps to introduce other folks to smartphones and smartphone photography. She can communicate and teach these skills in a manner that other seniors understand and appreciate.

Jeanine charges a small fee for this and the money she earns helps to supplement her income and be able to afford some of the extra things like travel, entertainment, and dining out.

As an artist at heart, she doesn’t plan to ever retire this side hustle. Think about your own hobbies and passions. Could there be a way for you to turn that into an income-producing side gig?

Another side-hustler who plans to never retire is our client Billy who is a professional Santa Claus.

That’s right. Santa Claus! How cool is that for an income booster?

As a member of three professional Santa Claus organizations, Billy appears everywhere from schools and restaurants to big city events to spread the holiday cheer. He stresses that this side-hustle is one that really comes from your heart and not from the boots and suit that you wear.

He enjoys talking to children of all ages and listening to their needs. Sometimes the job can require emotional fortitude as the requests aren’t always about gifts or toys but sometimes may include a plea that Santa helps a child’s father find a job.

Yet even so, Billy admits that what he enjoys most is visiting homes of children who are either chronically ill or home-bound. These visits fulfill his heart while the side income he earns helps he and his wife to pay some of their expenses in retirement.

Being Santa can be a serious business both emotionally and professionally. Billy must pass a criminal background check each year and has regularly attended schools and seminars to perfect his craft. He’s also a member of three professional Santa Claus organizations.

Takeaway: Think about the things in your life that you absolutely love to do. Could your passion benefit someone else? How could you monetize that so that you can earn some income while performing activities that hardly feel like work at all?

Become a Contractor for Your Former Employer

When Roberta Baciak retired from working in a local school lunchroom, she felt so bad about leaving them that she volunteered to be a fill-in worker whenever they are short-staffed. They were quick to take her up on her offer, so now she works one day a week every week and sometimes gets called in on other days.

She also works from home 15 hours a week as an administrative assistance for a coffee shop and roasting company owned by her daughter and son-in-law. She takes care of their invoices, payroll, entering expenses into Quickbooks, sending statements and things like that.

Her side hustles have afforded her the ability to pay off some medical bills and to have some pocket cash to spend on little things her grandsons. She also loves the honor of helping her family with their growing business.

She plans on working as long as she can for her family and probably another year or so at the school lunchroom because she enjoys seeing her co-workers and the kids at school.

Roberta recommends that other retirees looking for side-income check with their local schools because lunchrooms are often looking for people who are willing to fill-in on an on-call basis.

Takeaway: Consider negotiating part-time employment with your last employer before retirement. You never know when they might agree! If that’s not an option, who do you know that has a business? Are there any part-time services that you could offer to them with your skills?

Get Financially Fit with Furballs

I honestly can’t think of a side gig I would enjoy more than getting paid to hang out with some fur kids. Busy working professionals are using pet sitting services more than ever – J.D. tells me he frequently uses Rover to book walks for his dog — and what’s great about this particular job is that you could work contract though a pet sitting service, or you could just post your services in neighborhood sites like Nextdoor.

This side hustle is really flexible because you can work only when you want to, and you can pet site in your own home or in someone else’s home for a little more cash.

I myself am a busy entrepreneur, working long hours at the office and frequently traveling for business. When I’m going to be gone overnight, I pay a friend’s mom, who is retired, to come and spend the night with my fur babies.

It helps me sleep at night to know that someone is caring for them, but I also know love that my pet sitter is a retiree who can really use the money to help her make ends meet. It’s a win-win for everyone.

Not sure about overnights? You could start with some day visits or dog-walking, both of which are other pet services that many working people willingly pay for.

Takeaway: This one is possibly the easiest side gig of all to get started in. Post on your favorite neighborhood app or sign up as a pet sitter or dog walker with sites live Rover or Wag.

What Will Your Next Side Hustle Be?

These are just a few of the fun and creative ways to earn extra retirement income that some of our own social media followers at Boomer Benefits have shared with us. No matter what type of work you used to do, there are endless opportunities for new things that you can do once you are retired to supplement your income from Social Security and investments.

If teaching or pet sitting aren’t your thing, check out our post on 50 Ingenius Ways to Earn Money in Retirement for additional inspiration. You might also check out Ryan Helms’ Hustle to Freedom podcast, which is one that I’ve referred dozens of people to when they’ve shared that they want to work part-time but aren’t quite sure doing what.

The key is understanding that our digital world really does make it easier than ever to put a few extra dollars in your pocket each month and sometimes just that little bit makes all the difference.

Happy Hustling!

Source: getrichslowly.org

Apache is functioning normally

There’s been some discussion recently among moneybloggers about writing more for those who earn the minimum wage, and for those who face other financial difficulties. This is a good thing. But all this talk made me wonder: How prevalent is the minimum wage? Who works minimum wage jobs? I decided to do some research.

According to the U.S. Department of Labor, the median annual income of a U.S. worker is $32,140. Federal minimum wage is currently $5.85 an hour, or about $11,500 per year — just above the poverty line. Of the 76.5 million people paid by the hour in the United States in 2006, 2.2% make minimum wage or less. Here are some generalizations we can make about minimum wage workers:

  • Most minimum wage earners are young. While 2.2% of all hourly workers earn minimum wage or less, just 1.4% of workers over the age of 25 are paid at or below the Federal minimum wage. More than half (51.2%) of minimum wage workers are between 16 and 24 years old. Another 21.2% are between 25 and 34.
  • Most minimum wage earners work in food service. Nearly two-thirds of those paid minimum wage (or less) are food service workers. Many of these people receive supplemental income in the form of tips, which the government does not track.
  • Most minimum wage earners never attended college. Just 1.2% of college graduates are paid the minimum wage. If you only have a high school degree, you’re more likely (1.9%) to be paid minimum wage. Those without a high school degree are nearly three times as likely (3.7%) to earn minimum wage. 59.8% of all minimum wage workers have no advanced education.
  • Finally, as you might expect, part-time workers are five times more likely to be paid the minimum wage than full-time workers.

You can find more information at the official characteristics of minimum wage workers page, and in the page of data tables. Also, the Department of Labor has a map that shows how state minimum wage rates compare to Federal minimum wage rates:

These statistics mirror my own experience. When I earned minimum wage, I was working on farms or in restaurants. I was young. The other people I knew who earned minimum wage were also young. As an adult, I’ve known a few people who earned at (or just above) minimum wage. These people have usually lacked a college education. In many cases, they were actually working toward some sort of degree while they worked their minimum wage job. Most people don’t see a minimum wage job as an end, but as a means to an end.

That’s not to say that there aren’t those who aren’t stuck in bad situations. Research from the U.S. Bureau of Labor Statistics indicates:

Many workers begin their post-school careers in jobs paying the minimum or something close to it, but…the vast majority of workers move on to higher paying jobs as they accumulate experience. However, there is a nontrivial fraction of workers who spend substantial portions of their early careers consistently working in minimum wage jobs. […] Less educated persons, blacks, women with young children, and workers who reside outside of urban areas are much more likely to have such minimum wage careers.

The percentage of hourly workers paid at or below the Federal minimum wage has declined steadily (and significantly) since the numbers were first tracked in 1979. In 1980 and 1981, 15.1% of workers were paid at or below the minimum wage. In 2006, just 2.2% of workers were paid at or below the minimum wage. (A strong argument could be made that the minimum wage has failed to keep pace with the cost of living, and that employers have been raising wages on their own. In other words, this statistic may be meaningless.)

Enough numbers! Later today I’ll explore ways for those trapped in minimum wage jobs to get ahead. It’s not all about pinching pennies. I’d also like to hear stories from people who have worked minimum wage jobs in the past, and from those who still do. If I collect enough stories, I’ll post them in a separate entry. (If you’d like to share your story, please drop me a line, or post it in this forum thread.)

Update: I’ve posted my piece on how to escape from minimum wage.

Source: getrichslowly.org


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Source: mint.intuit.com

Apache is functioning normally

I write a lot about saving money. Like many of you, I’ve found frugality an excellent way to widen the gap between what I earn and what I spend. Frugality helped me get out of debt, increase my monthly cash flow, and ultimately begin to build savings. Thrift is a key component to personal finance.

But to be successful, to build wealth, you must also increase your income. You might do this by changing careers, or by obtaining for a promotion, or by asking for a raise. You might invest in real estate. Or you might start your own business.

I recently interviewed Timothy Ferris, author of The 4-Hour Workweek. I’ve already shared parts of our conversation:

In this final excerpt, Ferriss and I briefly discuss the power of entrepreneurship. Entrepreneurial skills are valuable whether you own your own business or you have a traditional job. At Soul Shelter, Tim Clark recently provided an overview of entrepreneurship. “I’m a firm believer that our fortunes in life are closely bound to entrepreneurship skills, whether we’re self-employed or choose to work for someone else,” Clark writes. “Studying entrepreneurship means examining the many ways one can earn a living.”

Here then is the final part of my conversation with Tim Ferris:

J.D.
My father was a serial entrepreneur. When I was a boy, he was always starting businesses. As a result, I have the entrepreneurship bug, as do both of my brothers. In many ways, Get Rich Slowly is a testament to his entrepreneurial spirit. I view it as a business. It seems to me that you are very much about entrepreneurship. Did entrepreneurship run in your family?

Tim
My father has been in various types of construction and development, and also real estate — buying, selling, investing. He’s been an entrepreneur for as long as I can remember, in that respect. He’s always owned his own business. My mother, on the other hand, has worked for Suffolk County, which is part of Long Island, in health services doing physical therapy for geriatrics for the last thirty years.

I feel like I’ve seen the best and worst of both of those worlds — the highly institutionalized employment and then self-employment. There’s certainly dangers and benefits to both, and I think I’ve had a pretty good [chance] to see both up close and personal. But entrepreneurship in the sense of starting businesses really wasn’t something that was recommended to me.

Part of what sparked my interest was Donald Trump’s The Art of the Deal. I think most of his books are a waste of time, but that book is extremely good. It’s all about the art of the deal and negotiating and so forth. There’s a lot of really good material, especially the dissection of his schedule. He basically walks through a typical day. Very, very interesting stuff.

When I was doing my undergrad and working in the library for $8 an hour — with no air conditioning and no ventilation in the middle of late spring — I really began to question just how scalable that approach was, even if it were $20, $30, $40, $50 an hour.

I was dyslexic at a young age, and developed coping mechanisms. I ended up being able to read extremely quickly, and to prepare for tests in some unique ways. I had friends saying, “Dude, when do you study?” There was a lot of classroom reading, and I did it, but very few people ever saw me spending more than a half hour on any given day, whereas a lot of students are spending three or four hours.

After a few people asked me this, I put together a seminar. I did the first seminar with guarantees and so forth. I had very low expectations for it, but I ended up walking out three hours later with $20 bills and checks spilling out of my pockets. When I ran the numbers, I realized that this was definitely a better model, but it was still not scalable because I had to be there teaching the seminars. I became very bored of it. After that, I started fantasizing about the different formats that a scalable business could take.

There’s a book by Entrepreneur Press called The Young Millionaires. It’s a really good book. Some of the business models are outdated now, but it basically has two to three page profiles of dozens of late twenty-something and thirty-something millionaires. It really inspired me to brainstorm different options.

J.D.
So how do you come up with money-making ideas — or “muses” — that can supply supplemental income and be easy to maintain and sustainable in the four-hour workweek lifestyle? It seems to me there’s no one right answer. It depends on the individual. The Young Millionaires book sounds like it might be a sort of cookbook, or an idea factory.

Tim
[I recently had the chance to ask Warren Buffet a question about investing.] If I had asked, “How should I invest my money?” I wouldn’t have received [a good answer]. I had to be very specific: “no dependents, thirtysoemthing, I can cover my expenses with other income or savings, etc.” There were a lot of qualifiers. Just like when somebody asks “How should I invest my money?”, there’s no way you can answer that in a meaningful way. The same is true with muses.

But in general, I would say studying case studies that you’ll find like mine, or The Young Millionaires would be another example, and then reading books like eBoys. I see my book as a valuable starting point so that you don’t focus on the wrong types of businesses, but it requires an analysis of your risk tolerance.

J.D.
Do you have any recommendations for people who aren’t entrepreneurial, who don’t have the ability or the interest in creating “muses”? These people might prefer to save and invest instead, but are still interested in the four-hour workweek lifestyle. They’re interested in lifestyle design.

Tim
I think one of the misconceptions with the book is that you have to use everything in the book. It’s really designed to be more of a menu of options for people to pick and choose from. I may go to a restaurant that I love, but I may hate half of their dishes. The fact of the matter is there’s no requirement to use “muses” whatsoever to apply the principles in the book. They’re principle-based and not tactical.

The rules in the book are really for increasing output and optimizing results regardless of whether you’re in someone else’s office or your own. That also applies to stocks. If you study The Intelligent Investor, you’ll find that the principles and concepts and the rational deconstruction of things that are made complex — because the croupiers and other people can make money by making it complex — it reads very similarly to The 4-Hour Workweek.

By focusing within an organization on using the proper metrics to measure your own performance, improving those metrics, doing 80-20 analysis, then you can increase your value within the company, and document it in such a way that you can then have more leverage to do things like take mini-retirements or work remotely one or two days a week or have a four-day work week (which many people have done) or simply to eliminate work on the evenings and weekends.

Then [one can] apply the same rational framework to investment. They’re completely applicable and adaptable to someone who has no interest whatsoever in starting a business. I’d say that the vast majority of the people who have used the book work within organizations.

Timothy Ferriss, nominated as one of Fast Company’s “Most Innovative Business People of 2007,” is author of the #1 New York Times, Wall Street Journal, and BusinessWeek bestseller, The 4-Hour Workweek.

Source: getrichslowly.org

Apache is functioning normally

If your parents are retired or nearing retirement and concerned about their finances, they might float the idea of getting a reverse mortgage past you.

After all, in that commercial, that nice man from Law & Order says that it’s a great way to get supplemental income in retirement.

Unfortunately, there is a great deal that the commercial leaves out.

And these issues are something that the reverse mortgage holder’s family—that is, you—will likely have to deal with.

After all, your parents aren’t getting any younger.

Here is the breakdown of what those in the Sandwich Generation need to know about reverse mortgage disadvantages—before Mom and Dad sign on the dotted line:

How Reverse Mortgages Work

At its core, a reverse mortgage is a way to convert the equity in a home into cash. In order to qualify for a reverse mortgage, the homeowner must be at least 62 years old, must own and live in the home, and must have substantial equity in the home. While lenders do not require that the home be completely paid off, the homeowner must be close to the end of their mortgage term in order for the lender to agree to a reverse mortgage.

With this loan, the lender will pay off whatever remains on the mortgage (if anything), and give the homeowner a payout in one of five ways: Tenure payments are monthly payments that will last for as long as at least one borrower still lives in the home. Term payments are monthly payments for a fixed period. A line of credit will allow the borrower to draw unscheduled payments for any amount whenever needed until the credit limit is maxed out. Finally, modified tenure and modified term payments combine the monthly payment option with the line of credit option.

Unlike a traditional loan, the borrower does not need to make regular payments in installments. Instead, the entire loan plus interest will come due when the borrower passes away, sells the house, or can no longer consider the home a primary residence.

For instance, if an elderly homeowner finds himself needing regular care, permanently moving to a nursing home will mean he has to pay back his reverse mortgage. However, the borrower has 12 months of living elsewhere before the home is no longer considered his primary residence. So a short time in a hospital or nursing home will not mean that the reverse mortgage is due.

One of the big benefits to a reverse mortgage is that the payments you receive from them are not considered taxable income. In addition, the payments will also generally not affect your Social Security or Medicare benefits. On those grounds, a reverse mortgage can seem like a good way for retirees to supplement their retirement income with their home equity without having to downsize or move.

The Fine Print

So far, so good. However, there are several aspects to reverse mortgages that can make them seem like less of a good deal.

First and foremost is the fact that you owe more money through a reverse mortgage as times goes on.

At the end of the loan term, either the borrower or his heirs will have to pay back the amount of the loan—which grows with each payment made to the borrower—plus interest.

As for that interest, while there are some fixed-rate reverse mortgages, the majority of these loans use variable rates. (It is important to note that the usual way of paying off the loan is by selling the house, meaning reverse mortgage holders and their heirs do not actually have to cough up the amount of the loan when it is due, unless they want to keep the house.)

In addition, the entire point of the reverse mortgage is to cash out the equity. That means that the old homestead will have no equity (or very little) left at the end of the loan term. So sale of the house will leave no cash for the heirs.

If the borrower’s heirs are interested in keeping the home, they will have to pay off the loan in order to do so. Most reverse mortgages offer something called a non-recourse clause, which means the borrower cannot owe the lender more than the value of the home when the loan is due and the home is sold. Basically, whatever the home sells for will satisfy the loan. However, heirs who want to keep the home will still have to pay back the loan in full, even if the amount owed is more than the home is worth.

It’s important to remember that reverse mortgages are not free. Just like any mortgage, there are closing costs, including loan origination fees and mortgage insurance premiums. Some lenders also charge servicing fees during the life of the reverse mortgage.

Also, the amount that can be borrowed is dependent on several factors, including the youngest borrower’s age, the interest rate, and the appraised value of the house. So even homes that are worth quite a lot may not provide the kind of reverse mortgage amounts that borrowers are counting on.

Finally—and this can be a real kicker for the adult children of reverse mortgage holders—the homeowner still maintains the title for the house, which means he is still on the hook for maintenance, property taxes, and homeowner’s insurance. In fact, failing to maintain the condition of the house or pay taxes or insurance on it can mean that the loan becomes due. If your parents are having trouble keeping up with their household chores—including home maintenance and bill paying—these sorts of jobs will fall on you.

What Are Reverse Mortgage Disadvantages?

The answer to that depends upon several factors. First of all, your family needs to decide how important it is to keep the house in the family. If your parents are talking about taking a reverse mortgage on the house where you and your siblings were born and where you’ve dreamed of seeing your own grandchildren play in the future, then a reverse mortgage might not be a great idea. Unless you know you will be able to pay back the loan, you should plan on having to sell the house once your parents have entered into a reverse mortgage.

If the home is meaningful to your family, an alternative to a reverse mortgage is for someone in the family to buy the home from your parents and allow them to continue living in it. This will provide them with the equity in their home in a lump sum, and if that equity is $500,000 or less, they can exclude the money from their taxable income. In many ways, this is a win-win, although it does depend on someone in the family having the ability to purchase the house.

Even if you have no particular attachment to your parents’ home, you may want to think carefully about whether or not to pursue a reverse mortgage. Depending on their ability to live independently and keep up with the important tasks of homeownership, a reverse mortgage may or may not be a good idea.

If you have reason to believe that Mom and Dad only have a few years before they will need some serious help, it might make more sense to access the equity in the home by selling it and getting them moved to retirement home or assisted living facility where they will be more comfortable.

If, on the other hand, you know your Dad still fixes the roof, strings the Christmas lights, and mows the lawn, while your Mom still cleans the house from top to bottom and weeds the flowerbed every day and nothing is going to stop them, thank you very much, then a reverse mortgage might work for them. They will get to stay in their home while still enjoying the equity they worked to build up.

Are Reverse Mortgages a Good Idea?

The real issue with reverse mortgages is why your folks might need one. If they did not save adequately for retirement because they were irresponsible with their money, or if they have trouble living on a budget or a fixed income, the problem may be one that a reverse mortgage cannot solve.

If your parents keep you in the loop on their financial issues, take the time to sit down with them and their financial advisor to determine the best course of action to keep them happily puttering and wondering why you never call through many years of retirement. A hard look at numbers will help you all determine if a reverse mortgage disadvantages outweigh the potential benefits.



Source: goodfinancialcents.com

The [Best] 30 Summer Jobs for Teachers in 2023

Inside: Are you looking for a summer job and the opportunity to make money? Check out our list of the best summer…

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