Is being an entrepreneur the only way to make money while traveling?

I read your post about “How To Live Abroad”, but I want to know what sorts of options are there are for married couples with a small child? Is the only option to be an entrepreneur and manage a business over the internet? –Guest

 

Dear Guest,

I apologize for just now writing you back. I had a baby, so I’m just now finally getting caught up after the major life change it is to welcome a new member of the family to your home.

While having your own online business has many benefits for the traveler, including tax writeoffs, plenty of discretionary time, a way to be productive no matter where you are, and a potentially limitless source of income, there is another way to make monthly passive income. And that is investing in real estate.

Jacob and I have never owned our own house, because renting is necessary to our spur-of-the-moment moving decisions. However, we own two duplexes that we rent out. Although ideally owning homes means money in your pocket every month without a second thought, the reality is it can be quite complicated. However, I do think it could be a viable option for someone who wanted to travel, ESPECIALLY if you chose a lower cost of living place to live.

For example, if you took out a loan for $200,000 you could purchase two duplexes at $100,000 each. These sort of deals are available right now because the market took such a hit in recent years. If each renter was paying $650 in rent you would make $2600/month. If you paid for a property manager at 10%/property, you would lose $260/month to your managers. Then you can expect repairs and other costs as well, depending on the quality of the house and the quality of your renters. Our renters are not high quality, nor are our houses, and therefore we end up doing quite a bit of repairs. Let’s say with repairs and with interest on your mortgage it bumped it down so your profit was $2000/month. That’s about $24,000/year. Although that’s not much of a salary in the US, it can go a long way in other places such as Central America and Southeast Asia.

All of a sudden, if you live simply and are interested in places other than Western Europe, the world of travel could get opened up to you.

It requires a little bit of risk-taking—after all, mortgages are debt, and if something major goes wrong with a house you are renting, (it happened to us) unforeseen costs can add up. I would recommend getting a real estate agent you can trust and a property management company who can handle everything while you are away. Another sock to your rental income can be if one of your renters decides to leave. Several months can go by while you look for new renters and that means you should have some cash stored up for that kind of situation.

So going on your $24000 of income per year…

Let’s look at a sample annual budget.

15957_702192214189_7176062_nIn Buenos Aires, Argentina, we rented a studio apartment for $600/month, furnished, with all utilities included (pictured left). It was right downtown next to the Congress building. So there were surely cheaper options, but we like to be in the thick of things.

$600 x 12= $7200

Mortgage payments= dependent on your down payment and interest rate. Here is a calculator that our reader sent in: http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx

Let’s be generous and say you can put down a 20% down payment and have a 3% interest rate. You’ll be at about $8000 per year.

If you cooked all your own meals with a budget of $20/day, with a weekly $20 splurge on going out to eat.

$20 x 8 x 52  =$8320

If you didn’t own a car and only took the metro, at $1/metro ride and a budget of $4/day,

$4 x 365= $1460

If you washed all your own clothes and hung them out to dry, laundry expenses would only be soap and next to nothing.

If you tried to keep your entertainment costs down by only visiting museums on their free days, and in general looking up free things to do in your city, you could stay busy without paying entry fees.

If you used credit cards and built up points, your flight costs out to Buenos Aires could be free. Our flight to New Zealand was just paid for entirely by credit card points. Also, if you go when it is off season your flight and hotel costs will be greatly reduced.

Yearlong visas may be about $100/each.

If you wanted to see more of the country, you could choose how much you wanted to splurge on travel costs. Would you take a flight or a bus to see Iguazu Falls? Would you want to stay in a fancy hotel or in a hostel? Up to you…that would be your discretionary costs and how much you want to cut into your savings. At this point we are about breaking even depending on your mortgage. You’ll still need some cushion for other things, like going to the movies, buying toys for your little one, souvenirs, clothes, drinks, or whatever else you like to accumulate/expend. However, keeping a chunk of money on hand in the event that you lose renters or need to fix things in your properties is always a good idea so you can breathe easier while you travel.

I hope this post helps you to see that worldwide travel is within your reach! At the very least, you could work and save like crazy for a year, then travel for a year with what you’ve saved up, then repeat…I’ve met others that choose to travel that way. If you want to make money while you travel, though, this real estate rental method might be a good option. Stay tuned for part two of how to make money while traveling.

If there are other readers out there who are working and traveling, please share your advice on how you are able to afford your travels.

Kalli Hiller

Article by Kalli Hiller

Kalli Hiller is a voluntary vagabond who, with her husband Jacob, has traveled full time for the last eight years.

Kalli has written 361 awesome articles for us.

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