99 Ideas for a Side Hustle… 12 Ways to Make More Money… How to Turn Your Side Hustle into a Full-Time Job…

We’ve all seen the click-bait. Heck, a lot of us are genuinely interested in a side gig to supplement our full-time career. Whether it be a passion project or something to bring in extra cash, many of us are seeking financial independence through a small business or side hustle to enhance our personal investment plan.

Sure, you can drive for Lyft, tutor students or teach fitness classes. Those are all great ways to quickly make an extra buck or two, but they don’t offer a long-term solution.

If you are thinking big picture, it is possible to look beyond the initial allure of “earn money fast” to plan for the future, save for retirement and reach true financial freedom.

Real Estate Investment.

The answer that many dream of, but don’t know how to start. I’m not here to convince you that starting a house flipping business is the perfect side hustle. Today, I’m going to walk you through the financial implications on your personal investment strategy so that you can make a good decision for yourself.

A house flipping business is a versatile investment component of a well-rounded financial plan. Fix and flipping can provide portfolio growth with downside protection and can also provide a long-term foundation for wealth building and income.

How Can House Flipping Provide Income?

A realistic personal investment strategy is to use house flipping to create a pool of profits. Then, use those profits as the down payment needed to purchase a fix and flip property and turn it into a rental. After all, the renovation needed for a rental is far easier than for a resale.

Once renovated and leased, the rental will appraise for more and can be refinanced at the higher price. The initial equity that an investor used to buy the property can now be used to repeat the process again.

With interest rates at the historical low end of the range, many rental properties comfortably cash flow using a 15 year mortgage. The resulting investment provides additional income that supplements a rainy day vacancy pool (downside protection) or accumulates towards the next property’s down payment.

In 15 years, an investor has an owned asset that provides pure income. In a way, this is a supplemental retirement plan that provides income and historically experiences an increase in value through home price appreciation. Not bad for a side hustle, huh?

What Can I Realistically Make Flipping Houses?

As I walk through sample target returns, I will focus on possible returns if the investment was made with cash. As you can guess, there are many ways to finance a fix and flip (we’ll cover that in another blog).

For our flips, we target a 12.5% return with the goal of turning our capital three times per year. This results in a 37.5% gross return target, which is enough to run and grow our business while providing a solid return for investors. This return target is realistic in our market today and there are many investors who make above that target.

3 capital turns/year * 12.5% return = 37.5% gross return

($300,000 investment * 3 turns/year) * 12.5% return = $112,500 gross return

Growth With Downside Protection.

No one can predict the future — geopolitical and financial events happen without warning. For instance, the 2007 subprime meltdown was largely unforeseen and led to a global liquidity crisis.

The key is to prepare for unlikely scenarios in advance and have a backup plan.

In the event that there is an unexpected national or global crisis, the residential resale market may grind to a halt. And, if no one is buying homes then they are looking to rent them.

In our pre-purchase property evaluation, we consider the rent estimate from Zillow and other sources. We create a Plan B in case something unanticipated arises. We will rent the property and wait it out. Again, this is a fallback for downside protection — just in case.

Overall, house flipping acts as a speculative investment in a portfolio similar to a high growth technology or biotech stock. The profits from flipping (and skills learned along the way) can be used to build a long-term rental portfolio. This occupies a similar place in a portfolio as a large-cap dividend paying stock like Exxon Mobil, Procter and Gamble or IBM.

For more information on how a fix and flip career can diversify your portfolio and help you achieve your personal and professional goals, visit Fixters Funding Network