UNIT 8: MONEY AND FINANCE
My name‿ is Dana. I let‿ out‿ a small flat,│ and‿ I should like to correct‿ a misconception:│ the income‿ is passive‿ in name‿ only,│ since what‿ is passive‿ is the receipt,│ whereas the labour‿ is‿ irregular‿ an(d) largely unpredictable.
In three years‿ I have had three tenants,│ one failed washing machine,│ and‿ a month with no ren(t) whatsoever. Property is capital-intensive‿ and‿ illiquid,│ an(d) the yield‿ is‿ appreciably lower than the brochures‿ imply│ once depreciation,│ maintenance‿ and‿ overhead‿ are‿ accounted for. What‿ it does supply is leverage‿ an(d) stability,│ which suits my temperament. My frien(d) Marco has‿ adopted the contrary model,│ which‿ is scalable│ and‿ almos(t) costless:│ he restores furniture,│ sells‿ it‿ online‿ and‿ is writingwri-ding‿ a book for royalties. His‿ overhead‿ is negligible‿ an(d) his‿ opportunity cos(t) considerable,│ since he devotes twentytwen-dy hours weekly to income that will not‿ arrive│ until nex(t) year.
The hones(t) formulation‿ is that passive‿ income‿ is generally income somebody else‿ earns‿ upon your behalf. A tenan(t) pays my mortgage,│ and‿ in‿ exchange‿ I accep(t) liability for the boiler‿ an(d) responsibility for‿ a home that belongs to another person's life. Diversifying‿ into a secon(d) property would merely double that‿ exposure. Given the choice,│ I should prefer Marco's model provided‿ I could survive the wait,│ an(d) that proviso is not‿ a detail. It‿ is the entire proposition,│ and‿ it‿ is the par(t) the advertisements‿ omit.