Have you ever looked at someone financially successful and wondered: How did they do that? The reality is that a lot of people who earn substantial amounts of money aren’t just working regular 9 to 5 jobs — in many cases, their also earning passive income. They aren’t necessarily racking up millions in their sleep (though some billionaires are!), but with upfront efforts, investments, and a bit of time, passive income earnings can add up.

Such is the case for Austin Glanzer, an entrepreneur who continues to earn thousands of dollars monthly through a passive income stream he started while still in college. Credello spoke to Glanzer about his journey to learn more about the challenges he faced, where he is now, and get his advice for people looking to start making passive income themselves.

How an FHA loan launched a passive income stream dream

Today, Glanzer is one of the owners of 717 Home Buyers, a professional home-buying company for homeowners looking to sell their properties fast and hassle-free. “Within 14 days or less, you will have cash in your hands and a big burden off your back,” their website promises potential clients, boasting that they will “buy your house as-is.” When homeowners are in a bind during major life changes like a divorce, bankruptcy, relocation, health issues, job loss, and more, 717 Home Buyers can step in with a cash offer quickly, no matter the home’s condition.

But Glanzer wasn’t always a business owner. Though he studied business administration in college, his first foray into making significant money came by way of passive income from real estate investment. “During my college years, I came across the concept of passive income, which intrigued me greatly,” he tells Credello. “The idea of generating money without constant active effort prompted me to explore the avenue of real estate investment – involving the acquisition of properties such as houses and apartments.”

With limited resources at his disposal, he researched ways to create passive income that wouldn’t involve coughing up too much cash upfront. The solution? House hacking.

“Essentially, this strategy entails purchasing a property with multiple units, residing in one unit, and renting out the remaining ones,” Glanzer says. “What truly transformed this approach was the possibility of utilizing government-backed loans to fund property acquisitions. Through an FHA loan, I acquired my first triplex. My wife and I occupied one unit while the rental income from the others not only offset mortgage payments but effectively eliminated our housing expenses.”

Exponential growth through passive income

In time, his strategy paid off. Glanzer acquired a duplex in addition to the triplex. “This elevated my holdings to a total of five units, with four of them generating consistent income that substantially contributed to our cost of living within the fifth unit,” he explains. After that, Glanzer purchased a single-family home to move into. “Remarkably, the combined rental income from the five units not only covered the mortgage on this new property but also encompassed insurance costs and, in most months, the entirety of utility expenses.”

But Glanzer’s passive income earnings didn’t end there. “This newfound financial stability empowered me to further amplify my investments, acquiring more properties under my business purview,” he says. “Subsequently, I generated an income stream that not only catered to essential living expenses but also allowed for discretionary spending, covering groceries, fuel, and leisure activities.”

In 2022 Glanzer posted on LinkedIn about his success with 717 Home Buyers, “Less than one year ago, I was hoping and praying to do one deal every other month just to pay bills. This month our guys have done over eight transactions already!” Now, a year later, the business has grown even more, and Glanzer’s initial passive income investment is still generating profit. “Currently, I possess two income-generating properties in addition to those owned by our business,” he tells Credello.

For the triplex property he initially invested in with the FHA loan, Glanzer says, “The three units generate monthly rents of $1,350, $1,300, and $1,250, totaling $3,900. My monthly payment, interest, insurance, and taxes amount to $1,780. This results in a $2,120 monthly cash flow.”

He says with his duplex property investment, “The two units generate $620 and $1.450 in rent, totaling $2,070 per month. My monthly expenses are around $970. Hence, I have a cash flow of $1,100 each month.”

Combined, passive income for Glanzer personally totals $3,220 monthly, which he explains generates enough to accumulate about $115,000 over three years.

However, Glanzer uses a large portion of his passive income to instead invest in his family’s home. “The remarkable aspect is that I also bought a single-family home for my family,” he explains. “With a $2,300 monthly mortgage payment, I still manage to clear almost $1,000 each month.”

How can you start earning passive income?

For those looking to do what he’s done, Glanzer advises folks to “begin by becoming an expert in your chosen field.”

Here’s a breakdown of Glanzer’s top tips to get your passive income stream going:

1. Education and networking: “I started my journey by listening to podcasts, reading books, and meetings with individuals who had achieved my goals.”

2. Concrete planning: “Developing a practical plan was crucial. Recognizing that I needed $20,000 as a safety net for property investment, I meticulously created a budget to save this amount. This involved making lifestyle adjustments like shopping at discount grocery stores, curbing unnecessary spending, and finding supplementary income streams.”

3. Strategic budgeting: “I devised a three-tier budget strategy—best case, worst case, and most likely scenarios. Utilizing separate tabs in Excel, I calculated potential gains and savings for each scenario. This exercise instilled confidence in my ability to reach my goal of acquiring an income-generating property.”

When asked what he might have done differently on the path to earning passive income, Glanzer explains his insight into the importance of keeping quality top-of-mind.

“In hindsight, particularly concerning real estate, I would have chosen to invest in higher-quality materials for my rental properties early on,” he says. “Although this incurs greater upfront costs, it pays off over time. I’ve learned that this principle likely applies across various industries: prioritizing quality from the outset can prevent continuous expenses down the line.”

Another roadblock you may face when looking to begin earning passive income is your current debt. As you start budgeting, look at how paying off your debt could bolster your ability to fund a passive income stream. Credello’s debt payoff calculator will compare debt repayment plans like the debt snowball and avalanche methods to help you examine exactly how quickly you can pay down debt and get started with your new earning adventure.

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Bottom line

If you’re ready to ramp up your passive income stream, there are plenty of ways to go about earning. Even if you’re not in the real estate realm like Glanzer, generating steady cash flow without much active effort requires time and upfront work.

“For those intrigued by the potential of passive income, my advice centers on cultivating patience, seeking guidance from experienced individuals, and embracing a continuous learning curve,” he says. “Despite my initial entry into this field with limited knowledge, I find myself, five years later, confidently capable of tackling various projects within the residential real estate sector.”

So, whether it’s content creation, peer-to-peer lending, art licensing, or real estate rentals, patience is the key to financial success on whatever path to passive income you choose.