Get a Non Job
This is an unusual article to be posted by a recording studio because it relates to finance more than music. I decided to post it because I feel it is especially important for musicians.
Being creative requires long periods of uninterrupted 'play'. Time without stress to explore sounds and ideas that are original.
What Is a "Non Job"?
A non job is a form of income which you get without the need to work for an hourly wage. I am thankful that I managed to achieve this several years ago and I would like to share with you how I did it.
How It Started For Me
It was 2007 that I read Rich Dad Poor Dad by Robert T Kiyosaki. Within nine months of reading the book I went from working 15 hour days to a 100% passive income (not needing to physically work for money). It is something that anyone can do, even without any savings in the bank.
The Power Of Passive Incomes
I want you to start by considering someone earning £50,000/year, he has money but almost certainly doesn't have time, which is the trap we call the “rat race”.
Compare that with someone who makes just £6,000/year (passively). Because this person doesn't work 9-5pm he has the time and energy to set up yet another £6,000/year passive income. In fact, he could continue indefinitely, building small passive incomes one on top of the other until he well exceeds £50,000/year. Passive incomes are 'scalable', you do not need to surrender your time for money.
Kiyosaki explains in his book how most people buy 'liabilities' when they should be buying 'assets'. He describes liabilities as things which take money out of your bank account, such as cars and mortgages. Assets on the other hand are things that bring money in like owning a business or rental properties.
This is something that all musicians should think about. There seems to be a hard wired belief with many musicians that being poor is somehow a noble attribute that reflects their musical integrity!
I myself had this belief for a long time. However, being smart with your time and learning about 'assets' will ensure you are able to continue playing music for years to come, instead of having to fall back on a time consuming "normal" job!
How Did I Escape The Rat Race?
I achieved a passive income with an existing small business and with rental property (purchased "creatively").
Before I had read the book, I had spent four years building a recording studio business. I would work six or seven days a week producing music for clients and the money was pretty good, but I was hyper stressed. I decided to take on a producer that I trusted to do all of the work. This would mean my wage would drop about 70% (as the business owner I would retain 30% of the profits).
To be honest, before reading the book I would have never done such a thing, I would have thought that was as good as throwing money down the drain and a huge risk.
But, I took the leap and within a few weeks I was completely comfortable with my lower wage and able to see the bigger picture. I now had time on my side - time to think, time to be creative and the freedom to plan my life.
Many of you won't have a business that you can leverage to get started but there is another option available to almost anyone … and that is property.
Can I REALLY Get Into Property?
You'll be surprised at how many creative ways there are to buy property. I was only earning about £100/week when I bought my first property and I've bought many since with joint venture partners who funded the deals. Believe me, there is ALWAYS a way if you are prepared to educate yourself, think outside the box or pool your savings with others to get started.
Before I talk about the specifics of how I acquired property I want to tell you why rental property makes such a great passive income. There are two main business plans for property investors;
Capital growth - which means you buy and hold and sell (at a profit) in a few years. London is great for capital growth, prices rise faster than anywhere else in the UK.
Yield - which means you want a proportionately higher return on investment from rental income. Popular suburban towns are best for yields in my opinion and it is high yielding properties that attract me nowadays because from day one you are receiving passive income each month.
Over the years I started helping others invest and recently set up Holla Property Group which enables people to build their own profitable and sustainable Buy-to-Let property business via a franchise model.
It takes skill and knowledge to find such 'juicy' properties but ask yourself this, is it easier to work five days a week until you are 60 years old or work your ass off for two years to create a passive income and then effectively retire?
If you take a look at the rental income on a recent investment that a franchise partner of Holla Property did you can see how property is a very realistic way to retire young.
Many entrepreneurs on the Forbes rich list made their money in property. In fact, most of Robert T Kiyosaki's income is generated from his 1000+ rental properties. The main reason property is a great investment is because you are able to leverage the banks money. Buying in the UK is also a smart move because we're a small island with limited space. People will always need somewhere to live, supply and demand ensures prices always go up (in the long run) and rental income almost always out-strips mortgage payments.
Like I said, I was earning about £100/week when I bought my first property. I went to the bank and asked for a personal loan for £10,000, saying that it was to invest in property. They declined my request. I then went back a week later and asked again, this time saying that I want it to buy a a car. They agreed straight away and gave me the money. It was then that I realised banks make terrible financial advisers, they want you to have 'liabilities' and do not want you to invest money wisely!
I pooled my money with my cousin and a mutual friend so that we had a combined total of £30,000. We were able to buy a property in London and start receiving rental income straight away. The income paid for the mortgage PLUS the repayments on my £10,000 loan. It was a eureka moment because in reality I had not put any of my hard earned money in, it was the banks money!
The financial market has changed and now these types of deals are pretty much non existent, but there is always a way. I had no choice back then so had to be creative. I learned a lot and failed a lot too, but that's made me a safer and more sophisticated investor today.
The lesson that “Rich Dad Poor Dad” teaches you, in order to be financially free you must embrace good debt. We are taught that debt is bad, but there are two types of debt, one is to buy liabilities (bad debt) and the other is to buy income generating assets (good debt). If you borrow £1.00 that you can make £2, that is good 'debt'. Simple!
Richard Branson probably has £500m worth of debt. Most rich people live with debt, but they understand the difference between good and bad debt. Without borrowing money you won't have the leverage required to be financially free.
How Do I Start?
You should start by getting hold of your credit report and fixing any issues. Forget about your credit score, that means nothing in the real world, banks will look at your report and ignore your score.
I had an almost perfect score but was refused a mortgage. When I got hold of my credit report I could see that my home address was spelt incorrectly and also my mobile phone contract was missing. I correct these to small errors and was able to get a mortgage within a week after doing this.
I was told that two crucial things help banks gain trust in you, these are;
Of course, if you are lots of debt that you are failing to repay you won't get a loan. But a history of well managed debt is a good thing. Lenders like to see that you are able to repay loans without defaulting.
If you have never taken out a loan you might want to consider it. But, never take out a loan unless you are able to pay off the debt. There is nothing to stop you taking out a small loan and only using it to pay itself off!
Get In Touch
If you are interested in investing in UK property, please contact Darren at email@example.com
If you are interested in this article, please contact Darren at firstname.lastname@example.org
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