Multiple Sources of Income

If you are a wealth seeker, you’ve probably heard this term many times. I was first exposed to it in the late 90s. It sounds wonderful – create several sources of income so you are not dependent on one source. It’s much easier said than done but is possible! It’s implied these sources are passive of course. If not, you could just get two or three jobs and have two or three sources of income BUT you’d have no time and I am certain you’d be tired all the time. Believe it or not, if you have a bank savings account that pays >0% interest, this technically is considered a source of income. However, in my eyes to be seriously considered a source of income it must produce in excess of at least $500 positive cash flow a year.

My first source of additional income beyond my full time job was a rental property. It was a foreclosure I was able to acquire via Auction.com. I will be honest, I was really naive when trying to acquire this house. It was a 4000 sq foot home that last sold for $399K. It had been on the market for over a year after the foreclosure and they had attempted to sell it twice on Auction.com then by a realtor. This happened before I stumbled upon the house. Anyway, I was able to find out that the first two auctions had yielded high bids of $225K and $210K but neither was accepted (below the reserve). My bid was $185K (below the reserve). Believe it or not, it was accepted! I think they realized their pool of investors was shrinking over time. The house appraised for $379K. I ended up doing a lease to own on the property and my first “multiple” source of income was born.

Since that first deal, I’ve acquired 3 more houses so I now have 4 rental properties (3 owned free and clear) that all produce good cash flow. I guess I’d be considered a real estate investor. I really enjoy the entire process of scouting out potential houses, making the deals, fixing them up, and renting them out.

I’ve also tapped into some other sources of income via music royalties. This is not a well-known area of investing. I first heard about it in 2012 on a radio financial talk show. I studied it and learned as much as I could for the next 2 years. In 2014, I took the risk and bought my first royalty package. The royalties come from the band 3 Doors Down with the highest producing asset being Kryptonite. I am seeing about a 15% return on this investment. I later acquired another royalty asset package with about 15 songs (pop R&B songs I was not familiar with). They are over 20 years old and producing an astounding 30% return on my investment.

I have found to create such sources of income you must have cash. This means you have to save, save, save. Spend less than you make and accumulate seed money. Once you have seed money, you buy an income producing asset. Over time if you save the cash from that source, you can move to the next deal – again accumulate cash to acquire another income producing asset. Much like when you hear about the “snowball” approach to paying off debt, this is similar….when you roll a snowball in snow, it grows bigger. When you have an income producing asset and bank the cash flow, it grows (cash accumulation)……then add another…..then another.

Technically, I have 7 sources of income now – my full time job, four rental properties, and two royalty asset packages. My six sources of income outside my full time job almost equal my full time job income. It took time to do this. It was not overnight. It took sacrifice and discipline (saving), lots of research and study, and balls (risk). I will admit now that these are in place, it’s worth it. I am secure in my employment thank goodness but if something were to happen to my job, I would not sweat it. I could live off my other sources of income with modest lifestyle adjustments.

My advice if creating multiple sources of income is of interest to you, the best start is to begin learning about it. There are a lot of books out there. Many won’t teach you how to do it but will expose you to what is available out there – real estate, royalties, blogs, online stores, E-Bay, YouTube channels, e-books, MLM, etc. From this research, you’ll need to figure out which is a best fit for you. Pick one and laser focus on it. Once you do, begin leaning as much as you can about that specific type. I started my learning about real estate investing in 2004 but it wasn't until 2014 I was in a position to do it. I spent two years researching music royalty investing before getting into it. Knowledge and preparation are key. You don’t need to be an expert but you want to avoid making a major mistake that could cost you thousands or tens of thousands of dollars. If possible, find a mentor! Most successful people are willing to give you advice or guidance if you befriend them in a professional and enthusiastic way – a cup of coffee or a cold beer goes a long way. (I prefer a cold beer.....I am not a coffee drinker)