Creating a Passive Income Stream Of $1k/mo
Today I decided to start work on a project creating a passive income stream of $1k/mo, or is $12k/yr. I have my own definition of what passive income is. Also, I would rather try something a bit more nontraditional. I have already made money using peer-to-peer lending, index-fund investing and owning a retail shop.
I don’t know how passive a retail shop, real estate or blogging is, I suppose I’m about to find out. $1k per month is quite a bit of money, requiring a minimum wage person to work over 25 hours a week to generate it. I think some sort of intellectual property would be the ticket which will require quite a bit of work upfront.
- write a book
- create an online course
- open a language school
- rent out cars on Turo
That’s all I got, pretty pathetic, I thought I could rattle off at least 20 different things. So, here is my assignment, I’m gonna research the shit out of passive income streams and report back what I find. Then I’ll pick something and succeed by failing (my forte).
I need to break this goal down into stages. Creating $1,000/mo of passive income is the ultimate goal, not the first step. The first step is for me to research a few options, pick one and roll with it.
If I can make even $20/mo I would be fairly impressed. So I’ll start with that … aiming to create something which will make me $20/mo. This something must have scalability, which means I should be able to expand it into something more lucrative in the future.
There is the old saying “gotta spend money to make money”, probably started by someone selling something on an infomercial. It’s easy to get carried away with this concept. I certainly will be spending some money, buying a few books, paying for my shared office space etc. I don’t want to limit myself to an overhead quite yet, though I will limit my investment to $100k… should I decide to front any cash.
Most things that I have researched either require a hefty upfront financial investment or many hours/months of work before generating income. Sure, there are all these juicy success stories on the internet, then again how many people applied to medical school the same year as me just to get denied.
Creating some sort of digital product appears to be the most favorable. Creating a song, taking impressive photos, or writing a book and making money off of the rights is taunted as having passive income potential. This includes creating content for Google’s AdSense.
So, I can’t say I have had any success yet. I need think outside of the box. I will start by looking at what people are paying for around me, where are people spending their money and in what nontraditional ways are they doing it?
I have thought about food items that one could sell major stores. The problem is that turnover on such items is tremendous. I don’t believe in supplements so that’s not something I will pursue though I had a shady friend in college that made a ton by developing some crap that he sold through GNC for many years.
One concept I have identified is that one needs to use an already established system as leverage to get one’s product or service out there. For example, no need to market your own book if you can do it through a publishing house or through Amazon, a lot of the work (and profit) diminishes by doing so. Selling a physical product in a large chain store would drastically reduce your advertising costs.
So that brings me to the last point, what is it I would like to market? A physical product such as medical device? Or a software such as a smartphone application? An online platform for information exchange such as a blog? A service such as consulting? I’m excited to figure this out. Stay tuned.
I was thinking about passive income and how I would define it, still haven’t come up with something definitive and there likely is no one encompassing definition. I was in Stockton visiting my mom and got a call from someone in my medical group who wanted me to get involved on a new project. He started out by saying it was going to be paid admin time, smart man, he must have known where my heart is at!
The exact details of the project isn’t relevant here, what matters is that it is non-clinical work. I would be paid my regular hourly wage to do some administrative work. So, then it popped into my head that I would be making passive income through this, and not just this, I am already doing admin work in my organization. I recently talked about wanting to go part-time, in order to have less clinic time – what better way of doing that, than taking on more (a little more) admin work.
Don’t get me wrong, admin time is still work. However, there is no such thing as truly passive income which I already talked about. Either a large upfront time has to be invested in a project or a small amount of time on an ongoing basis. I think I prefer a mix of both (thereby creating multiple passive income streams). Writing a book would be an example of the former and running a website could be an example of the latter. My experience thus far with admin work is that there is a sweet-spot, too much and you will drown, too little and it’s not even worth it.
Companies want to get their products in front of the eyes of the consumer and that’s why they pay a hefty sum for marketing and advertising. They place their products on the sites that get the most traffic and they hire spokespersons who get a lot of attention mentioning their products.
Essentially they are paying for eyes on their products. When it comes to the online platforms, content drives traffic and traffic is what the advertisers care about. You could be talking about how to pick your nose or the next dumbass running for the presidency, it’s the number of eyes viewing your online content which matters.
Podcasts are doing the same with their listeners though from what I have noticed they are more selective about the kind of products they advertise. On a podcast, the products advertised are a lot more relevant to the content being broadcasted.
So, I can create some sort of online content which will generate enough traffic that would be attractive to advertisers. If it’s volume we’re talking about then either a niche website created using keyword scavenging or a YouTube channel would be needed. Honestly, I don’t think I have any interest in doing something like that just for the sake of traffic.
YouTube videos have potential, I don’t want to dismiss that. I watch a good bit of it when I want to learn something specific, I don’t let the front page generally dictate what I’m going to watch. I do my search and stick to the videos which have good, relevant content.
Now, there are companies that want you to buy their next $1.99 piece of shit that cost them $0.04 to make. These companies really don’t give a shit about exact product placement, they are the sex workers of the internet (no offense to sex workers)… if you’re looking then you’re a potential customer.
Then there are more ‘sophisticated’ companies who want to reach a very specific audience. They probably have a tough enough time finding their exact customer base and they don’t have enough volume to whore (no offense to whores) themselves out all over the web.
So, I will make a list of the various companies that I could hit up for advertisement. Because this site is something I really enjoy writing for I want to keep the companies limited to those offering services which improve people’s lives. I don’t exactly know what that would be, so I will have to look into that. Possibly some insurance products, good financial advisers, loan refinancers, tax consultants etc.
I don’t believe that I work all that hard but when I tally up the time I spend doing ‘work’ stuff it adds up.
I love the website stuff, some days I can’t wait to jump on and write or read and learn. Writing here has always been something for myself but because I am learning something that I think could be valuable to some of my friends I like to keep it public.
Keeping it public also forces you to put in a certain effort which otherwise I don’t think I could commit to. Isn’t that the reason we have personal trainers? Lifting the weights, running on the treadmill etc isn’t hard, anyone who is physically capable can do it, staying motivated is the tough part.
Update: Well, I haven’t gotten much accomplished… that sounds negative, let’s just say I haven’t been able to come up with any new ideas since the last time I wrote.
The likely reason for not having been able to advance further towards my goal is because I’m feeling stretched a little thin. I am doing a lot of things that I like to be doing but…
My time is divided between exercise, writing, reading, working, socializing and my relationship. Some of you might be laughing, like, that ain’t shit. The truth is, though I thrive and have always been capable of some serious multitasking, I no longer enjoy it.
I will give this project more thought in the next few months, let me see what else I can come up with. I won’t be putting active time trying to build a passive income, though, not until I can feel a little more ‘caught up’. Which really means I need to take some shit off my plate.
I was in the shower this morning and I was thinking about this whole passive income stuff. I mentioned a few paragraphs ago that real estate may be the easiest way to make ‘passive’ income.
In a few weeks, I’m gonna move in with my lady and my place will sit empty. It’s a 350 sqft studio located in a very walkable and desirable part of Portland, Oregon.
I could charge nearly $100/night for my place and looking at the popularity, I think I could get a fairly decent occupancy rate. After factoring in a maid and some minor repairs I could definitely generate decent income without me even touching the place.
Even at $50/night, I could remain profitable if I hire a company/person to do all the management of the place. They would handle the advertising, the communication with the guests, repairs and turning over the place.
Bam!! Project $1,000 squashed! Okay, not really because I have to do it first. Let me see if I can come up with something else first, if not I’m going with this because I need to save face with this page.
Definitely getting much more comfortable with the idea of real estate as a means to generate some “passive” income, a term that I am still trying to understand.
For now, anything I do that’s less work than my current job which still makes me income I will consider as sub-active income, passive-ish income.
Since about 10/2016 I started doing work for a website answering medical questions for patients. I play less the role of a healthcare provider and more of a medical consultant.
I answer questions individually, at my convenience and I get paid per question answered. I consider this passive income because the work is quite unintrusive. I can do as much of it or as little of it as I please.
My Next Steps
I’m going to focus a little more on real estate by continuing to learn about it, look for those who have experience in it and by keeping an eye out for great deals. I am still considering to rent out my condo but I haven’t yet figured out where I’m going to live – stay tuned.
Starting/Buying a business. Is a business in which one must work in order for it to make income truly a business? Maybe, if such is the case for the first few years of the business. A physician with his/her own urgent care who is the solo physician really doesn’t have much of a business – autonomy, yes, but not a business.
I am looking for a business opportunity which I can either invest my savings in or my knowledge in.
Investing my savings means that someone who has a viable idea, good plans to execute it and the network to have a chance at success, would get my money in return for an either guaranteed rate-of-return or a certain percentage of the profits. This may not be easy to come buy since money is more ubiquitous than it’s ever been – scary for the economy and prohibitive for small-time investors like me.
Investing my knowledge would mean being a consultant. In order to play this role I need experience, connections and I need to leave a paper-trail showing that I have accomplished or successfully failed at something which can provide someone a benefit.
I am doing this by becoming one of the first few physicians for a new telemedicine startup. For now I’m only a clinician but my goal is to ask for a stake in the business instead of income-per-hour.
It’s a wonderful transformation to witness my lack of desire for more income, the actual work that I want to do is taking center-stage. I desire some income still, ideally in that a-ton-of-upfront-investment-so-that-I-can-have-a-quasi-passive-income-later sort of fashion.
I could make this upfront investment either financially, which would kickstart things, or I could trade my time for the necessary investment. I prefer the latter because I am much more of a DIY-er and less of a money-leverager.
You have to decide which kind you are for whatever project you’re considering to undertake. It’s not that I’m right or you’re wrong, your process has to make sense to you, has to fit your personality.
Leveraging money is very powerful.
I want to point something out which I’ve observed over the past few years whilst pursuing all this financial mumbo-jumbo. It appears that those who are willing to take a risk with money on themselves have the highest returns.
I don’t think they necessarily have the highest success rates, but it’s not a shot in the dark either. You know how they say that 90%+ of businesses fail in the first 2 years?
I don’t think that’s the case with subsequent business attempts. The more you fail, the more ways you learn how not to do something.
Leveraging time is also incredibly powerful.
Shit, I spent 13 years obtaining an education which now allows me an income of $200,000 per year. I didn’t even use any of my own money, I leveraged student loans in order to gain this skill.
Granted, I must actually work in order to make this income but it’s one powerful fucking income.
Packaging my knowledge for easy access.
It’s wonderful that the internet and breadth of information available to the masses is growing so aggressively. It also means that more and more information has to be sifted through to find exactly what you’re looking for.
As an example, if you drive through low-income neighborhoods you will see a lot of hoods up, cars on jackstands as people are repairing their own cars.
If you don’t earn a ton of money then you would rather spend your time instead of your money on a service you need. Imagine making $12/hour, would you want to spend $80/hour to have your car repaired?
On the flipside, if you’re a doctor who makes $100/hour, would you be willing to pay someone $30/hour to clean your home or would you rather do it yourself?
Another example, if you want to learn exactly what’s involved in your upcoming meniscus surgery and you earn $50/hour, would you spend 3-4 hours searching the internet, not knowing the accuracy of the information you come across, or would you pay $25 for an in-depth video that outlines the entire process? A video from a reliable source, one with fantastic reviews.
Creating efficient courses that others are willing to purchase.
It’s not like I can search the web and learn everything I want about meniscus surgeries and then write about it. It would be halfway decent but not up to par. I’ve never done one, I have no fucking clue about the pre-op, op and post-op process. I’m not familiar with the common questions that patients ask – my video would possibly suck ass.
If I spent a lot of time as a resident interviewing medical students on the admissions committee, wouldn’t Ibe the best candidate for creating a video on the topic?
And how would these candidates find me? Because I have created a presence for myself on the web. I have published a blog, written online articles, given talks and maybe I have a podcast on it.
Would a medical student pay $50 for this course? Maybe. Would they pay $50 if I talked about what it takes to get into an elite medical school which perhaps was my alma mater? You bet your chickens they would.
I am coming up on a year since starting project $1k. Looking back through my writing, I didn’t set a timeline for myself to reach this goal, thank god!
I have had a lot of fun trying to analyze the various options out there to generate passive income. I am left with 2 such options currently, both of which are commanding a fair share of my time.
Options #1: Working on intellectual property.
Intellectual property can be writing a book, creating a course, taking pictures and selling them online, or creating a paid website.
I am drawn to the first 2, either writing a book or creating a course. Writing a book is important to me because it’s a great skill to learn and it requires me to research the shit out of everything I put on paper.
I have a good outline for a book which I am working on. Every day, I try to work on a particular chapter. I am in noooo rush, if I finish it in a few months, great. If it takes me several years, no problem.
Writing a timeless book is important to me. If I write something that only holds true for my audience in 2017, then I’m not sure how much value I have brought to the world of non-fiction books.
I would prefer to write about concepts, share ideas and teach skills which can remain applicable for decades.
Option #2: Starting my own business.
If you recall, a few months back I talked about how I no longer believe in such a thing as “passive” income. Either a slight bit of work has to be invested in an ongoing fashion or a lot of upfront work has to be invested.
With intellectual property, most of the work is put in up front. I create the course or write the book and then market it. Selling the product is the easy part which I can tackle myself or completely farm out.
Starting my own business is different in that minimal initial upfront work is needed but the main way to generate a steady income is an ongoing, minute time commitment.
I am building up a virtual practice, where I can hopefully build a small army of patients whom I will get to know quite well over time. These patients will, from time to time, need my help and because I have gotten to know them, I suspect the work will be minimal.
For this business model, I will either follow a monthly subscription model or a pay-per-visit model. The former will make a lot more sense to match a passive income model.
It’s been a year since I started Project $1k. I am proud to report that I have had absolutely no passive income coming in. Good job Dr. Mo! I’m sure my dad is proud.
However, the first major step that I have taken towards lazy money is starting to charge $20/month for my premium content on the blog.
Well, I don’t have a massive readership so I don’t expect to have a line out the door of people trying to sign up.
It’s a process, isn’t it? I need to keep reading more books in order to deepen my knowledge. Then I will come up with more original content.
As I take on more interesting projects (such as the virtual medicine stuff) then I will have more like-minded individuals following the blog.
I have made mentionable income from the virtual practice but nothing from the monthly subscription model of the practice – honestly, I think that might be a bust, we’ll see.
I am starting to feel more comfortable with the idea of real estate as a form of not-passive-whatsoever income. Feel like I made a full circle to land back on real estate – I’m sure next week I’ll feel different again.
I’m listening to this book and learning a lot.
I started creating a membership site on this blog, just a portion of the site. Haven’t had any takers which makes sense, there are few unique ideas on here.
I think with enough time and experience I will not just regurgitate ideas in my posts but also create a flavor of my own. Maybe I’m doing that slightly already or maybe I just haven’t met enough people to determine how unique my viewpoint is.
I mentioned a while back on this page that it would be great if I could make even just $20/month. It’s true, I should be starting small instead and not aim for the whole $1,000/month of passive income.
If I find the right kind of real estate then I will make the move.
I am looking with my realtor and have come across some really interesting opportunities. We even came across a $2 million dollar 12-unit complex. It’s already cash-flow positive at that value. I haven’t discounted it yet but I am pooling my resources to see who will go in on it with me.
It’s the committing, that’s always been my biggest success factor. Whenever I have committed to a project I have succeeded. The problem here is that I simply haven’t committed to it – not sure if that’s bad. Coincidentally, I am working on a post where I’m whining about how I am tired of being the go-getter professional type.
I’ll say this, the fact that I even started this $1k Project really has gotten me thinking and I am figuring shit out. So perhaps the main next step is for me to pull the trigger and commit.
So far the 2 things which have generated me some passive income are my index funds and my condo in Portland via AirBnb. I guess I really wanted there to be something else outside of the common index funds and real estate paradigms but they still seem to the be the most straightforward concepts to generate a passive income from.
I suspect it has to do with the fact that they have been tested throughout the years and a model exists for me to follow.
My dividends are making me money and I’m pocketing nearly $1,000/month from them alone. That’s about a 2% dividend rate for me. If i had event more REITs then I would likely have double that rate in passive income.
I wouldn’t say my real estate income is exactly a proven model since it has only been 1 months since I placed the condo on AirBnb. But in that time it has made me a good chunk of money. Just 1 month’s rent has paid for most of the property tax for the entire year.
I am still going to pursue other passive income strategies. In my current financial situation I feel comfortable taking some calculated risks. As my friends are finding themselves in better financial situations too, they are starting businesses and asking me if I would like to invest. If the right opportunity comes along then I will do so.
I should mention one other potential passive income situation. A friend wants to open a cosmetic + functional laser office. I would be the medical director and eventually hire another MD to replace me to do the in-person work. My upfront work would rewarded with having a share in the business. This would be a worthwhile way to spend my time and expertise.