Did I catch your attention with that title? It sounds pretty good, right? It makes you think, “Well, what’s the catch?” What exactly do I have to DO at this job? That’s what I thought when I clicked on this title from CNBC’s Make It: 59-year-old’s side hustle brings in $1.3 million a year—he only […] The post Work One Hour a Day and Make 1.3M with this “Side Hustle?” appeared first on Lazy Man and Money.
Did I catch your attention with that title? It sounds pretty good, right? It makes you think, “Well, what’s the catch?”
What exactly do I have to DO at this job?
That’s what I thought when I clicked on this title from CNBC’s Make It: 59-year-old’s side hustle brings in $1.3 million a year—he only works 1 hour a day: This ‘math formula’ makes it work
(If you click the link it will open in a new tab/window.)
Unfortunately, of course, there is a catch. We haven’t found the solution to everyone’s money problems, as the article implies. Let’s dig in.
Buying a Real Estate Empire
The 59-year-old is Steve Barsh. Here’s how the side hustle works:
” [Steve Barsh] owns and runs property management company Parker Chase Properties, which brought in $1.27 million in revenue from bookings on VRBO, Airbnb, and travel software platform Hospitable last year, according to documents reviewed by CNBC Make It. (Barsh is an investor in Hospitable, according to the company.)”
…
Parker Chase manages five condo rentals, including four that Barsh and his wife own. They spent a total of roughly $6 million to buy three of them in 2019, with $100,000 down payments for each, funding the purchases largely through money his wife took home from a biotechnology company acquisition, Barsh says. They bought the fourth after selling their original condo in 2023, he adds.
A few things from there stand out:
Extreme Leverage
Putting $300,000 (total) down for $6M in real estate is only 5%. Most people couldn’t get away with putting down $100,000 for a $2M home. The mortgage lender would need to see that you have a very high income. You certainly couldn’t say, “Well, this is going to be my side hustle. I’m only going
to work an hour on it.”
Extreme Income
Perhaps it is easier to convince the mortgage lender to give you that kind of leverage if your wife recently sold her biotechnology company. Even though it says they were funded from his wife’s sale, he has a not-so-regular job:
“He’s a startup investor by day: a venture partner at nonprofit accelerator Inception Studio, and an advisor to organizations and CEOs ranging from SeatGeek to NASA, he says.”
Extreme Timing
He bought a lot of real estate in 2019 with low interest rates before COVID. Either his crystal ball is better than mine, or his rabbit’s foot is more effective. I’m not sure which, but probably a bit of both. If you want to do that today, you’ll need to acquire $12 million worth of real estate and own at least half of the equity in it.
Extreme Fine Print
You’ll notice that the properties bring in 1.27M in revenue. However, I couldn’t find a detailed analysis of the expenses. Presumably, they are paying the mortgages. Also, “Barsh manages the properties, along with a housekeeper and a backup manager who steps in when he’s out of the country.” Maybe the backup manager isn’t too expensive, but a housekeeper for several AirBNBs isn’t going to be cheap. That’s a full-time job.
You can make a lot of revenue by selling $5 bills for $1. However, that would be a terrible business.
So, how much is Parker Chase Properties’ actual profit? It’s not clear, but maybe it is still more than a million a year.
Three Big Questions
While I was reading the article, I had had three big questions:
1. Can you do this, too?
In the article, they ask Steve Barsh if his formula can be duplicated. Amazingly, he says it can be.
However, he seems to say that there are a lot of people who are real estate investors. That is less shocking. We’ve owned real estate as part of our retirement plan for almost 20 years now. It’s on a much smaller scale.
2. Is this amount of huge leverage safe?
I’m reminded of the story of Casey Serin. He became famous in 2006 after buying eight homes with no money down by simply stating his income. Unfortunately, it was the worst time to make the worst real estate bet. The sub-prime crisis caused real estate everywhere to soon crash.
Casey Serin would have needed perhaps ideal conditions for his plan to work out. He would have needed the kind of real estate market that Steve Barsh had. Steve Barsh had great income sources, so he didn’t need the perfect real estate environment even though he got it.
3. Why not invest the money in the stock market instead?
This “side hustle” begs the question, “What about just investing the money in the stock market?” It’s a little harder to get that kind of leverage with the stock market. However, you can always buy on margin.
Real estate did really well from 2019-2022 or so, but prices have mostly stopped going up. The S&P500 has gone up more than 4.5 times since 2011. Since 2023, the S&P500 has gone up 50%.
As someone who is invested in both real estate and stocks, I can tell you that my stock investments have blown past my real estate investments.
My current thinking is that real estate when it’s priced reasonably, can provide an initial cash/equity boost due to leverage. However, over time, that advantage tends to fade away as stocks have historically had larger returns. To get the best of both worlds, it may be best to cash out of the real estate after 8-10 years and invest in stocks. Another thought is to use a 1031 exchange to split the equity in one appreciated property into two properties. You have to be careful with this strategy so you don’t end up over-leveraged.
Final Thoughts
Usually, I don’t write about such obvious clickbait. To be completely honest, my article for reviewing January’s financials won’t be ready until later this week or next week. Also, it is too early to write about the tariffs that started to flood the news last night. I’ve been negative enough about the policies of this administration. I’m taking a more wait-and-see attitude.
The post Work One Hour a Day and Make 1.3M with this “Side Hustle?” appeared first on Lazy Man and Money.
