Automated Income

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CFAvsMBA's picture

I’ll admit it. I’m lazy and I don’t like working. When asked my dream job, it would be doing 2 chicks at the same time for a living. Sorry Mr. Hedge Fund PM, it’s not working for your sour ass.

I’ve been kicking ideas around for automated income. I now bring these ideas to the infallible oracle of AF for criticism.

Franchising - There are a number of businesses where one can open up a franchise. I’ve been looking at this avenue. Assuming the business is well branded, it would not be all that difficult to find a location and place the establishment there. The hiccup I’m seeing is many franchises want active owners, not passive investors. Anyone know of a franchise co that allows a passive investor to simply hire out the help while reaping the rewards?

Vending Machines - Much like franchising, there are vending routes you can buy into which gives you exclusive rights to a specific region. This would be a stable income type of plan, but the involvement would be low. What type of yield can one earn in vending?

Laundromat/Storage Units/etc. I’ve been real tempted to buy property since the values have decreased as they have. On this property, I can place a laundromat, storage units, etc. Low involvement overall by management.  This is a double whammy. I’d get the current income from the business activities, but I’d also get the gain in property appreciation.

I’ll be the first to also admit that I’m no Buffett, Soros, or Obama. These are simple ideas that even a dumb guy like me can do.  And if they work, one can always sell out all together.

Please critique, criticize, hate, spew racism (Frank), etc.

As for my number, I’m pretty sure I can use the z-table instead of the t-table, provided I am willing to assume no sampling bias. 

AFloverboy's picture

Buffett started with pinball machines too, so maybe you do think like him.

On the other hand, Buffett is spelled with 2 t’s, so maybe you are not like him after all.

CFAvsMBA's picture

^ Infallible wisdom. Thank you.

As for my number, I’m pretty sure I can use the z-table instead of the t-table, provided I am willing to assume no sampling bias. 

Sweep the Leg's picture

A dude I used to work with set up blogs and collected ad revenue from google and revenue sharing from various vendors. His goal was to start 1-3 blogs a day on some random topics, write a few paragraphs about it (enough to show up on searches), and link to products via different vendors. He could have an individual blog set up with Google Ads running and links to products in about a half hour. He said once you get up to about 3,000 blogs it’s easy money.

Actually that sounds like a horrible life. Disregard.

CFAvsMBA's picture

^ and here we are rotting away on AF giving Chad the ad rev.

As for my number, I’m pretty sure I can use the z-table instead of the t-table, provided I am willing to assume no sampling bias. 

AFloverboy's picture

we should demand a cut of the ad rev or we leave en masse. CFAvsMBA, want to start a competing site with me? We can even use the old AF layout that every loves PLUS we’ll have a bank office forum (like the old days).

FrankArabia's picture

its not automated income, its called investing.

basically, you want to sit around and not work right? me too. so all you got to do is invest in the right business and let it ride…..pinball machines, coke, or disney all produce the same result, cash. trick is, you need capital to start with which you don’t have.

you owe me the number of ahot classy babe like Joan from Made Men for giving you this invaluable piece of advice cause you would never have figured it out on your own

CFAvsMBA's picture

^ The Infallible Investor of AF has spoken. Respect.

As for my number, I’m pretty sure I can use the z-table instead of the t-table, provided I am willing to assume no sampling bias. 

CFAvsMBA's picture

Bump. This is my one serious post of 2012.

As for my number, I’m pretty sure I can use the z-table instead of the t-table, provided I am willing to assume no sampling bias. 

The Righteous Hacksaw's picture

This is a great question though as I am assuming many people here are on track to making millions by the time they are 40 and then will be too old to work in finance and probably too old to learn a new trick. What will you do to sustain your “f*ck you money” lifestyle?

No Homo

ohai's picture

I don’t think there is an easy and reliable way to make consistent money in excess of your current capital. If you get involved in some kind of store franchise, you will need to put effort into running the store. If you invest in rental properties, the purchase price is theoretically the present value of rents for perpetuity. So either you have to be rich to begin with, or you need to work hard to become rich (which is the opposite of what you are trying to do).

If you ask me, the only way to beat the cycle is to move to some place with an extremely low cost of living. This way, at least the problem of initial capital is alleviated.

“I’m a CPA! I got money b***h!”

The Righteous Hacksaw's picture

Agree 100 percent on living somewhere cheap.

Still, I know a lot of wealthy people who have silly businesses that keep them wealthy and with a lot less work then you would think. These businesses don’t require MBA’s, CFA charters, or rocket scientist excel skills.

Take the guy who owns a hotel and has someone like Sheraton operate it for them. They get a steady income even when they are on vacation.

I notice that they usually involve a little local knowledge and skill.

No Homo

ohai's picture

But the question is, how did that guy come to own the Sheraton to begin with? He was rich enough to buy the hotel - so he was probably wealthy relative to other people where he lives.

“I’m a CPA! I got money b***h!”

CFAvsMBA's picture

Not sure I fully agree. I could buy a cheap slab of land out in the boonies. Put a storage unit on it which is nothing more than concrete garages. And start collecting income. Ideally, the land around it will begin developing at some point giving my property substantial appreciation.

As for my number, I’m pretty sure I can use the z-table instead of the t-table, provided I am willing to assume no sampling bias. 

ohai's picture

But you don’t know if and when that land will be developed. If that land is cheap, there is probably a good reason for that. Either there is little potential for development or it is inconvenient to access (which makes it undesirable as a storage location). Maybe both. You are assuming that there is such thing as an investment that is absolutely superior to other investments as a function of risk, expected return, and maintenance required. There is no such investment.

This is why I suggest moving to a cheap place. Cost of living is a variable within your control. Even if your income is the same as it would be elsewhere, it will seem like you have more money.

“I’m a CPA! I got money b***h!”

The Righteous Hacksaw's picture

ohai wrote:
But the question is, how did that guy come to own the Sheraton to begin with? He must have been rich enough to buy the hotel to begin with. From that point, it doesn’t matter what he decides to do.

1. Simple, he worked 100 hours a week at a hedge fund until he was 40 and accrued 15 million.

Lets say the hotel is a 10 million dollar asset. You can leverage that and buy another and then another and the another assuming they are making money.

No Homo

ohai's picture

Right, so basically, the choice of investment (the hotel) was not the reason for his success and cushy lifestyle. The reason that he has his current life is that he was rich to begin with, and his wealth came from something not related to the hotel. Ownership of the hotel shows that he is rich, but it is not the initial cause of his wealth.

My argument is that to eventually have a cushy life like hotel man, you must either 1) be already rich, or 2) work hard to become rich. This guy does not violate these conditions. He was a 2) and then became a 1). OP wants to violate both of the conditions, which I argue is extremely unlikely.

“I’m a CPA! I got money b***h!”

Sweep the Leg's picture

One of the key reasons behind America’s entrepreneurial spirit is the lack of debtor’s prison. If you have a good idea, just leverage yourself silly. If it works out, sweet. If not, go bankrupt and start over in seven years. No biggie.

The Righteous Hacksaw's picture

ohai wrote:
But you don’t know if and when that land will be developed. If that land is cheap, there is probably a good reason for that. Either there is little potential for development or it is inconvenient to access (which makes it undesirable as a storage location). Maybe both. You are assuming that there is such thing as an investment that is absolutely superior to other investments as a function of risk, expected return, and maintenance required. There is no such investment.

This is why I suggest moving to a cheap place. Cost of living is a variable within your control. Even if your income is the same as it would be elsewhere, it will seem like you have more money.

That is all true theoretically - it reminds me of that Dividend irrelevance theory of Mondigliani and Speghetti in Level 2.

However, seeing potential in the real world is a lot different than trying to figure figure out if a stock is undervalued. If this weren’t the case then we would all be value investors and nobody would ever start a business or invest in a startup. The real world is full of potential that is just waiting for someone to come along and use it.

No Homo

The Righteous Hacksaw's picture

Sweep the Leg wrote:
One of the key reasons behind America’s entrepreneurial spirit is the lack of debtor’s prison. If you have a good idea, just leverage yourself silly. If it works out, sweet. If not, go bankrupt and start over in seven years. No biggie.

You’re right there. Life is one big free call option in the United States. You can also just give your home and whatever to wife so that if you do fail they can’t come after her. I’m sure there are other ways besides this.

No Homo

ohai's picture

ChickenTikka wrote:
However, seeing potential in the real world is a lot different than trying to figure figure out if a stock is undervalued. If this weren’t the case then we would all be value investors and nobody would ever start a business or invest in a startup. The real world is full of potential that is just waiting for someone to come along and use it.

But now you have to add an assumption: that the investor in question is either very lucky or is smarter than other investors, such that he can spot such opportunities. Neither of these is necessarily within our control.

“I’m a CPA! I got money b***h!”

The Righteous Hacksaw's picture

I get where you are going with this, I really do, Ohai. It’s not incorrect.

The Original Poster is basically saying, “I don’t want to work like this forever.” But, he wants to maintain his high paid lifestyle. (I’m with him, I think we all are) I do not think that you need to work hard, the way many of us do, to make a lot of money. I also think that you do not have to have a job where you are constantly competing to keep your job in order to make a lot of money. Isn’t that why some people put in 100 plus hours a week, because if they don’t someone else will and snatch their job?

Yes, wouldn’t it be better just to cash out at some point and park your money in something that you are the boss of (can’t get fired) and work at your own pace? Not everyone can stay in the finance and investment industries forever. Most of us will quit it by the time we are in our 40’s. Wouldn’t it be nice to get that noose off your neck? To know that you had a decent income generating business on the side that could support you and potentially your children if they are not smart enough for a finance job or if they industry ceases to exist by the time they are adults.

It’s diversification of your income streams actually. So if we want to be purely theoretical, won’t that simple act of putting your capital in something unrelated to “finance” probably reduce the volatility and standard deviation of your personal return? I have a lot of friends that own apartments in cities like london and rent them out to other people. This gives them a source of income should they lose their own jobs.

Your success will largely depend on this skill that you are talking about in “spotting opportunities” or managing whatever business you buy. But at least you won’t be competing with 20 year old asian math geniuses. 20 year old asians. don’t own hotels……. yet.

No Homo

itera's picture

you guys overcomplicate everything. Don’t think of it as spend little and earn big. Think of everything as: more risk = more potential reward

So you buy crummy land, slap a space rental on it collecting income. Well the risk of loss and failure is high, but if it works, you get more reward.
If you buy good land, and do the same, you get little risk with little reward, or none at all.

I would say the real advanatage is first mover. Where something has not been tried yet, but after analyzing everything, you see a good chance at something no one thought of yet. But you need capital to make it work.

Most people are not ready to risk everything on an idea without some backup plan or security just in case it fails. That’s why the rich get richer. With plenty of funds to try new ideas, like VC you only need one winner even if you funded a bunch of failures.

I know that’s my goal. Once I have a guaranteed life + retirement ready for me, all the excess capital I have will go straight to pursuing what I want to do: restaurant + vineyard

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

higgmond's picture

Sport Clips has been running radio ads looking for people to open new franchises. They specifically mention that you don’t need any prior experience and don’t need to be active in the management of the franchise. No idea what the buy-in amount is though.

Vending machines are a lot more work than you think. No comment on the other things.

I’m a creepy-ass cracka.

Palantir's picture

Lending Club.

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

brain_wash_your_face's picture

Buy houses where hipsters or students do not live yet but are likely to. Rent. If there is already a vegan coffee shop in the neighborhood, then even better.

Or, just rob a bank if your risk tolerance is higher.

“Some people make shoes. Some people make houses. We make money and people are willing pay us a lot to make money for them.”

Palantir's picture

Only if you can find a bank worth robbing.

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

The Righteous Hacksaw's picture

That’s why I’m pursuing a CFA charter - it’s the Gold Standard in bank robbing certifications.

The problem is that I think the boys from Goldman et all got to the Fed first. Party’s over. Might as well go home now.

No Homo

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