All right, income report time.
Good news is, one big piece of my side project of the last few months is now done.
There’s a second piece coming up in a few months, but it probably won’t be as intensive as the last few months. Still, there will be 6-8 weeks this summer where I’ll drop off the grid again.
Until then, I’m back on HYW, working through my backlog, pushing the site forward.
It’s also time I pull back the curtain on my new full-time job of the last few months: I joined the product management team at Pinterest.
I work on content products, personalization, machine learning products, and other stuff. It’s waaaay different than Redfin, my last company. It’s a good company, and there are lots of new things to learn and get up to speed on.
Now, February results…
In February, revenue took a nosedive. I booked $2,013. This was down -36% year over year. Ouch. It’s a little concerning, ‘cause while February is normally a light month, it’s been some time since we had a month this low.
I’m not entirely sure. I ran through my checklist of diagnoses. Didn’t see a clear culprit. Search rankings didn’t change as far as I can tell. Email signups were normal. Fewer people simply converted.
I’m still thinking through other hypotheses, but this is a good reminder that you can never take a passive income stream for granted. No matter how strong it is, it’ll eventually peak and wane.
To mitigate that, you have to continuously evolve and grow your product offerings, ‘cause no income stream is immune from disruption.
Local neighborhood economics can dampen a rental property’s rent.
Stock profits (and dividends) can get eaten away by competitors.
Government regulation can kill promising ventures.
Online businesses can lose search rankings.
And customer interests can simply change.
That’s why any passive income stream needs caring and feeding to keep it strong. And since all income streams eventually dry up, growing passive income is really about adding new passive income streams faster than old income streams decline.
Slow progress this month…
1. Real estate nibbles
There’s still very little house inventory on the market right now.
I’ve started to branch out and search for things like delinquent tax sales, sheriff’s auctions, probate actions, etc, to see if there are any opportunities for bargains there.
I want to write a step-by-step case study on how to search these areas, but I haven’t found solid leads yet…at least not in any location we’d want to live in.
Even for the couple properties I found that weren’t dead on arrival based on location, the prices on them require really deep pockets, or ability to gather a ton of cash from outside investors quickly.
The problem with many of these properties is they’re not bank financeable, ‘cause there’s usually defects with them (e.g. owner took a sledgehammer to the house as a thank you to the bank / government for kicking them out), or there’s some encumbrance clouding title.
Which means you can only buy all cash.
And even though everyone knows these properties are fixer-uppers and you’re really buying for the land value, they can still exceed half a million bucks easily.
I dunno about you, but I tend not to keep wads of cash like that lying around under my sofa cushions.
Hopefully in the next couple months, as the buying season wakes up, inventory will open up more. There are certainly buyers waiting.
That’s ‘cause stocks are flying high: the market seems to be pricing to perfection expectations that Trump will flawlessly and quickly deregulate just about every industry (banks, insurance, oil and gas) which will, in turn, unleash a flood of profits.
There’s no discount being given for potential legislative roadblocks. No discount for Trump’s own erratic and unpredictable decision-making.
Meanwhile, interest rates are steadily rising and most banks now price their 30-year mortgage above 4%, which we haven’t seen for years.
Lots of home buyers are recognizing the implications. They see a richly valued market by historical standards, and are cashing out and trying to grab cheap home mortgages, bidding housing prices up the nose in the process and squeezing Bay Area inventory even tighter.
Kelly and I visited several open houses in February. We saw homes already listed waaaay over what they could possibly be worth in any near-term future. And they STILL sold for 5-20% over asking.
What are people smoking? I know stocks seem overvalued and all, but it really feels like people are yanking money from one overvalued liquid asset into an even more overvalued illiquid one.
Sure, real estate is less volatile than the stock market, but that doesn’t mean you won’t lose money if you buy like a crazy psycho. I just don’t get it.
Kelly and I are going through full credit underwriting right now with 2 different banks to get financing commitments out of the way so we can make our offers that much stronger.
But we won’t overpay. I’m intensely patient when it comes to buying real estate.
Right after finishing part 1 of the side project, I switched over to doing our taxes. What an ordeal. Our taxes were hella complicated this year.
We had W2 income, side business income, rental property income, interest and dividend income…and I also changed jobs. Tracking and separating out business expenses, computing deductions and depreciation, applying carryovers, etc, took a lot of wrangling.
And it underscored to me the importance of building systems, keeping clear paper-trail records, making a habit of tracking things real-time with taxes in mind, and timing expenses / income strategically to minimize taxes.
I use Google spreadsheets for month-by-month tracking, Google photos folders to organize snapshots of receipts by year, and digital notes taken in real-time to remind me of key dates and amounts that I’ll need to input at tax time.
Each year, I improve my systems more and more so that when I sit down and open up TurboTax, the data I need is already well-organized and there are minimal head-scratching moments where I need to hunt down some receipt or try to remember some deductible expense during the year.
3. Twitter followers: ~816
As I wrote in the last couple reports, our Twitter account dropped after our lil’ bot got banned in December. Followership has stabilized around 816.
Now that I have a couple months of reprieve before I go radio silent again for side project part 2, I’ll spend some time in the coming weeks implementing a smarter Twitter automation system to crank follower growth.
1. Continue searching for real estate
We’ll keep combing through websites, county assessor notices, and other sources to hunt for real estate. And keep going to open houses and doing neighborhood drive-arounds. Real estate in a competitive market is definitely a numbers game: you gotta stay disciplined and keep chipping away at it.
2. New case study
Gonna try hard to crank out a new case study this month: I put this on hold when things got busy last year, now it’s time to spin it back up.
3. New “about” page
I’m writing a new “about” page to better articulate what HYW is about, my goals, and what you can expect from following the site. Coming soon.
4. Grow traffic
I have to get back to carving out time to growing traffic and email signups. This slipped over the past few months given how busy the side project was. Bad on me.
Last fall, I enrolled in an online summit conference where a bunch of internet marketers teach strategies on growing your email list. I didn’t watch any of the sessions live, but I recorded them all.
One of the things on my to do list is to go through all the videos, pick out growth strategies relevant to HYW’s current level of traffic, plan out and sequence the strategies, and then execute. I’m excited to get on this because there’s a treasure trove of insights in the videos.
I pruned a bunch of dormant emails from my list earlier this month. Here’s my current March email signup goal (it’s already mid-month as of this writing):
Current subs: 318
March target: 350
Welp, that’s the long and the short of February. Let’s make March count!
QUESTION: Have you filed your taxes yet? Did it turn out how you expected? Did you run into any tricky or confusing issues? Leave a comment below and let me know!