Why I Hate the Word ‘Passive’ Income
Look, let’s get one thing straight. I’ve been in this game since 1998. Started in a tiny office in Detroit with a guy named Marcus (not his real name, obviously). He swore up and down that real estate was this magical ‘passive’ income stream. Passive. Right.
I’m not buying it. Not then, not now. And I’m gonna tell you why.
First off, nothing about real estate is passive. You gotta find the property, then you gotta deal with tenants, and don’t even get me started on repairs. Last Tuesday, I got a call at 11:30 PM about a busted pipe in one of my units. Passive? Hardly.
But hey, maybe it’s different for you. Maybe you’re one of those lucky ones who found a perfect tenant and a flawless property. Good for you. But don’t kid yourself—it’s not the norm.
My First Big Mistake
Oh man, where do I even start? Back in 2003, I thought I was hot stuff. Bought a place in Cleveland without doing my due diligence. Turns out, the neighborhood was gonna be completley different in a year. Crime rate spiked, property values tanked. I lost $87,000. Yeah, you read that right.
And the worst part? I should’ve seen it coming. I mean, I walked around the block, saw the boarded-up houses, the graffiti. But no, I was too busy dreaming about all that ‘passive’ income.
So, here’s my advice: Don’t be like me. Do your homework. Talk to the neighbors. Hell, spend a night in the area if you have to. Because nothing’s worse than buying a money pit.
The Tenant Nightmare
Let’s talk about tenants. Oh, tenants. I had this one guy—let’s call him Dave—who swore he’d pay rent on time every month. First month, he’s late. I say, “Dave, what’s the deal?” He says, “Oh, my dog got sick.” Okay, fine. Second month, he’s late again. “Dave,” I say, “this is getting old.” And he hits me with, “My car broke down.”
Which… yeah. Fair enough. But then it becomes a pattern. And suddenly, you’re chasing rent like it’s your full-time job. And guess what? It kinda is.
So, what’s the solution? Screen your tenants like your life depends on it. Because, honestly, your financial life might.
Repairs: The Never-Ending Story
You know what they don’t tell you about real estate? The repairs. Oh, the repairs. I had this one property where the roof started leaking. Then the AC went out. Then the kitchen sink clogged. It was like a never-ending parade of issues.
And don’t even get me started on finding good contractors. I once hired a guy who “fixed” the roof, and then it leaked even more. I had to pay someone else to come in and do it right. $3,200 down the drain.
So, here’s the deal: Always have a buffer for repairs. Like, a big one. And find a contractor you trust. Because you’re gonna need them.
But Wait, There’s More
Now, I’m not saying real estate is all doom and gloom. It’s not. I’ve made a killing on some properties. But it’s not passive. It’s not easy. And it’s definitely not for everyone.
And if you’re thinking about diving in, do yourself a favor. Check out this home buying guide first time. It’s got some solid advice. Not as good as mine, but it’s a start.
Anyway, I’m gonna wrap this up. I could talk about real estate all day, but I’ve got a 3 PM meeting with a potential buyer. Wish me luck.
About the Author
Sarah Mitchell has been a real estate investor and magazine editor for over 20 years. She’s made every mistake in the book and lived to tell the tale. When she’s not writing or buying property, she’s probably arguing with her husband about the best way to renovate their latest project.
