The MapleMoney Show » How to Spend Money Wisely » Real Estate

Finding Freedom through Passive Income, with Rachel Richards

Presented by EQ Bank

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

Are you familiar with the concept of “making money while you sleep?” If not, chances are you’d like to be. Many would argue that there’s no such thing as true, passive income, but my guest this week would beg to differ.

Rachel Richards knows a thing or two about generating passive income. She’s the bestselling author of “Money Honey” and “Passive Income, Aggressive Retirement”. Rachel quit her job as a financial advisor at age 27, and today lives off of $15,000 per month in passive income. This includes almost 40 rental properties. According to Rachel, just about anyone can build a passive income stream, and she’s here to show us how to get started.

Rachel begins by explaining the 5 main categories of passive income, which includes something she calls, coin-operated machines. She also shares her story, including how she and her husband went from having no passive income to owning almost 40 rental properties in just a few years.

That’s not to say that creating passive income streams is easy. To figure out what will work for you, Rachel recommends that you start by taking stock of what is in greater supply: your time or your money. Building passive income will require one or the other, so this will help you decide.

Did you know? You can now transfer money overseas with TransferWise directly from your EQ Bank Savings Plus account. Not only will you benefit from earning 1.70% interest on your savings, but you’ll pay far less for international money transfers. While other banks have a habit of sneaking in markups and extra charges, that’s not something you’ll have to worry about with EQ Bank. Visit EQ Bank to start saving money today.

Episode Summary

  • The 5 main categories of passive income
  • How to decide which type of passive income to create
  • How Rachel acquired 40 investment properties
  • Rachel breaks down her own passive income streams
  • Why Rachel self-published her first book
  • Why marketability is so important to passive income
  • Understanding the “Factors of SCRIMP”
  • Biggest mistakes you can make when earning passive income
Read transcript

Are you familiar with the concept of making money while you sleep? If not, chances are you’d like to be. Many would argue there’s no such thing as true passive income but my guest this week would beg to differ. Rachel Richards knows a thing or two about generating passive income. She’s the best-selling author of Money Honey and Passive Income, Aggressive Retirement. Rachel quit her job as a financial adviser at age 27 and today lives on $15,000 per month in passive income. This includes close to 40 rental properties. According to Rachel, just about anyone can build a passive income stream and she’s here to show us how to get started.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Did you know you can now transfer money overseas with TransferWise directly from an EQ Bank Savings Plus account? Not only will you benefit from earning 1.7 percent interest on your savings, but you’ll pay far less for international money transfers. While other banks have a habit of sneaking in markups and extra charges, that’s not something you have to worry about with EQ Bank. Visit to start saving money today. Now, let’s chat with Rachel…

Tom: Hi, Rachel, welcome to the Maple Money Show.

Rachel: Hey, Tom, thanks for having me.

Tom: Thanks for being on. You’ve released a couple of books and one I found interesting was about passive income. First of all, normally we save this for the end of the show but can you tell us about the book?

Rachel: Yes. It’s called Passive Income, Aggressive Retirement. Clever title but I can’t take credit. One of my readers thought of it. I talk about my passive income journey and how I retired with over $10,000 per month in passive income. I define what passive income is and why everyone should have it. The majority of the book is where I go into detail about 28 different passive income streams and how to start creating each one of them.

Tom: Most listeners probably know this, but what is passive income?

Rachel: The way I define passive income is it’s money that is earned with little to no ongoing effort. Now, it is definitely not a get-rich-quick scheme. It does take time or money to create passive income but once you have it going, then it becomes a lot more hands-off. Now, is anything truly 100 percent passive? Maybe portfolio income is but that’s just because you can invest your money and forget about it. But for most income streams, it will take a couple hours a week or a few hours a month of work just to maintain.

Tom: That’s a great point. Sometimes I get into that mindset of wondering if passive income is actually real. Often in the blogging world you hear how you can make a passive income blogging. But it’s a full-time job for me. What does passive income look like for you? What streams are you working on?

Rachel: I have several. My two main ones are rental income and royalty income. And my journey of creating passive income started in 2017. In the beginning of that year I didn’t have any passive income. That year my husband and I bought our first duplex. It was later that I wrote and launched my first best-selling book, Money Honey. So we had these two passive income streams, rental income and royalty income. We grew those as much as we possibly could over the next few years. Fast forward to today, we own almost 40 rental units. I have my two books and then we have a few other little income streams. All combined, we’re making over $15,000 per month now.

Tom: Great. You mentioned royalty and rental income. Are there other categories that might apply to other people?

Rachel: Yes. In the book I talk about five main categories, royalty income, coin-operated income, e-commerce and ads, portfolio income, and rental income. And in terms of trying to figure out what passive income you should create (because there’s so many ideas), I basically tell people to start by asking yourself, “Do I have more time or do I have more money?” because it will take one or the other to create. Now, if you’re anything like I was a few years ago, you would have said, “I have neither.” So to you I would say, “Well, which would be easier to create more of? Would it be easier to free up more time or create more money?” That’s where I’d start. Something like portfolio income will definitely take a lot more money, but it’ll be a little more hands-off. Royalty income would take a lot more time upfront and less money so in some ways that one is more attainable for people.

Tom: With portfolio income, I think everybody gets that concept. It’s investing, getting dividends and benefiting from that. You mentioned coin. What’s that about?

Rachel: Yeah, it’s coin-operated machines. It’s a really intriguing idea. Think of something like a vending machine. You spend a couple thousand dollars to buy a vending machine, get an agreement with the owner of a location (like in a business complex) and put it in the lobby there. You basically would need to just go restock it and collect the money once a week so it’s pretty passive that way. And you can even outsource that too. But there are other things like ATMs and laundromats. My husband and I seriously thought about investing in a laundromat at one point. But instead of doing a whole laundromat, you could just buy a coin-operated washer and dryer machine and put it in an apartment complex and make a deal with the owner of the complex. There are lots of really interesting ways you can do that.

Tom: That’s interesting. I had kind of heard about this a long time ago before I got into online activities. I don’t know if I read it in a book or something, but I heard about gumball machines and vending machines and such. Is that something that’s still a real thing that people are making money from?

Rachel: Yeah. It’s a real thing. I don’t personally do it but I see other people that are doing it and having success. The hardest thing is finding a location because it’s competitive, no matter what avenue you take. Finding a location that hasn’t been taken yet is difficult.

Tom: Now back on your income, with 40 units, how did you scale that up so fast? Were you taking the money and just reinvesting? Were you putting in additional money of your own from salaries or whatever?

Rachel: We invested in 2017. That was our first purchase. And even before that, my husband and I had a couple of things going for us. We both graduated without debt. I paid my way through school. He used his military benefits and we were always pretty good savers, pretty responsible with our money. I always tell people I’ve never made six figures in my life. I’m not a trust fund baby. I’ve just been able to save money. And even when I was making $32,000 a year in my first job after graduation, I was saving 50 percent of my income. So it only took a few years for us both to have enough to invest. Our first duplex was $100,000 and we each put in $10,000 toward our down payment. And then in terms of how we were able to scale, we were lucky to invest in a reasonable area. We were in Louisville, Kentucky. That’s a great place to invest. It’s cheap. It’s not a super expensive city. Also, we kept saving the same way we were saving before. And with anything we were buying, we would save and reinvest the cash-flow. It’s not like we were spending more money. We were saving all that money. But the biggest factor, I think, is the fact that I had my real estate license. I never had it to act as an agent or help people buy and sell houses. I only had it for my own purposes as an investor. But the great thing about that is I could represent myself as the buyer’s agent on the transaction, which meant that after closing, I would get a commission check back for thousands of dollars as the agent. So, we would basically fully deplete our savings to buy a property, then I would immediately get back thousands of dollars in commission which would kind of kick start the savings for the next down payment.

Tom: Well, that’s very interesting. The idea of keeping this passive… We had Dustin Heiner on the show before and he broke out this full plan where he has a team and basically doesn’t do anything too direct with his real estate. I assume it’s similar with you with 40 units. You’re probably not fixing all the washers and dryers and everything yourself.

Rachel: Correct. When we first started out, we did more on our own because we had the time. But now our circumstances have changed a little bit. And we’re also in Colorado now so we’re long distance landlords. It’s not like we can just drive down to our properties when our tenants need us. I always tell people that you have to build in the expense of having a property manager because chances are none of us want to quit our full-time job or generate passive income just so we can become a full-time landlord. So even if you start out self-managing it in the beginning, definitely still build in the expense so you know the numbers will still work when you hire somebody. We’ve gone through phases. We hired somebody and that turned out to be a disaster. I made a really big mistake with that. We went back to self-managing and that’s pretty much what we’re doing now. We have various people in place. But really, you can make it as passive or as not passive as you want.

Tom: Yeah, that’s what I remember when I was in college and was renting an apartment. I was renting it from this senior and he would come in with his tool box and fix things up. Or he’d bring in a new appliance if something broke down. He was really doing all of it now. Granted, he was a retired senior so it was probably great for him just to get out-and-about. But he wasn’t owning 40 units as far as I know either, though.

Rachel: Well, it’s a good way to learn when you’re starting out. In the early days with our first duplex I remember my husband and I going down there when there was a faucet or drain issue and giggling as we looked up YouTube videos trying to figure out how to fix it and trying to pretend like we knew what to do. But it’s good now because we can be a little bit more protective when a handy man or a plumber comes over to tell us what we need. We can question that because we have that knowledge now. But I think it’s great to start out and do as much as you can on your own.

Tom: Now, your other income stream was the books. Going back to the first book, how did you decide to get into that and what did that process look like?

Rachel: So here’s what happened. I was already done being a financial adviser because that was my first job out of college. All my family and friends would come to me for financial advice, which is great, because that is what I love to do. And I also began to wonder why they weren’t reading books or learning on their own. Then I remembered that personal finance is boring. It’s overwhelming. It’s complex. No wonder people don’t like to learn about it. I thought to myself, “How can I take this topic and make it sassy, fun and simple?” And that’s where the idea for Money Honey came from. I immediately sat down and began to write it. I felt very compelled. The words just came pouring out of me. And then about four months in, I did a 180. I was filled with such extreme self-doubt and was telling myself things like, “Your writing is crap. Who are you to write a book on finance, Rachel? If you go through with this, it’s going to be embarrassing.” So I quit writing the book and legitimately had no intention of picking it back up. Luckily, I had a friend talk me into finishing what I started out to do. But in the end, the only reason I went through with publishing it is because I told myself, “If I can just help one person, that is all I want to do.” And I’m glad I lowered my expectations so much too because I think if I had been out to make some quick money, people would have seen right through that and it wouldn’t have done as well. Thankfully, I did go through with it because Money Honey has been more successful than I ever would have imagined. It now has over 600 reviews on Amazon.

Tom: Is it self-published? And if so, what’s that look like?

Rachel: It is self-published. I initially started out thinking of traditional publishing because I feel like that’s where everyone kind of goes first. I was doing my research, looking into it because my expectation was if you get a traditional publishing book deal, they will essentially do this whole marketing launch and all the promotion for you. Once I started researching and asking other authors, they told me that’s actually not how it works. I was surprised to find out as well, because when you get a traditional publishing deal, they still expect you (as the author) to do 99 percent of the marketing. And the thing is, with traditional publishing you’re going to make a 10 to 15 percent royalty. If you self-publish on Amazon, which anyone can do, you make a 35 to 70 percent royalty. The way I saw it was, if I’m going to be doing all the work anyways, I would rather make more money and retain complete creative control over my product. I am extremely happy I did that. I think any first-time author should absolutely self-publish.

Tom: How do you go about doing that? Is it Create Space? I’ve heard of that. Is that how you get this setup?

Rachel: Yeah, Create Space is the old name of the platform. That’s what it was when I published Money Honey. It’s all moved over to Kindle Direct Publishing. That’s the name of Amazon’s platform. You can do e-back and paperback. You can do an audio book on Audible. My books are in all three formats.

Tom: Okay, with the audible audio book, did you read that yourself? Did you have to go through all that too?

Rachel: So, no, I ended up hiring a narrator. I know some readers really prefer the author to read it themselves. I think I could have done it and done a good job but it was a time constraint for me at the time because I was under a tight deadline. But the narrator I hired is so fun. She voiced it really well so I’m really glad I went with her.

Tom: Yeah, and that might be a whole new skill set you’d have to learn. Just because you can write a book doesn’t mean you can read the same book.

Rachel: Exactly. Exactly.

Tom: So, we walked through your two income streams. You mentioned five different categories. There are a lot of opportunities. I think you said there were 43 you mentioned in your book. Do I have that number right?

Rachel: No, there are 28 passive income models.

Tom: With that, how does someone evaluate these? I’ve got lots on my blog, too, where I list all these different ideas, but how do you decide which one is right for you?

Rachel: I created a system in the book just for being able to compare one against another and really figure out what’s the best passive income stream to pursue. It’s called the factors of SCRIMP. It’s an acronym that stands for several different things. First, you have scalability. That’s the S. You want to think about how scalable the passive income stream is. Something like rental income, for example, where you invest in one property, to scale it you have to spend a ton of money to invest in another property. It’s hard to scale. It’s not like you can just suddenly be a Nationwide real estate investor with a huge empire. But something like a book is easy to scale because it’s online. You have an unlimited amount of people that could potentially find and buy your book. That’s scalability. Then you have controllability and regulation. This is how much control you have over the passive income stream. For example, if you’re selling digital downloads or downloadable content on Etsy, where you create the item once and then you can sell it over and over again and you don’t have to keep doing work. That is something you probably don’t have a lot of control over because you’re subject to Etsy’s platform. If they decide to just stop letting you do that, they could just cut you off. They can change their rules and their fees at any time so you don’t have a lot of control. So that’s something to think about. Then you have the investment—the initial investment. Like I said, you have to either have time or money to invest into creating passive income so you want to figure out which one you can invest more of right now. Then you have marketability. Is your product marketable? This is most pertinent to the royalty category. Think about my book. There are thousands of personal finance books out there so it’s a credibly, saturated and competitive thing to try to do in the first place. You really have to ask yourself, why would someone buy my product (or service) over the thousands of others that are already out there? And if you can’t articulate that well, it’s going to be really hard to sell. You have to make sure you have a market. Do your market research and validate your idea. And Finally, the last one is the passivity—how much ongoing work is this? All passive income streams are difference. Like we said, portfolio income is a little more hands-off. Something like blogging or drop shipping or if you’re managing on your own and doing airbnbs, those are going to be more work. You have to ask yourself, how passive do I want this to be? Which income streams are more passive than others? And that’s what the factors of SCRIMP are. There you have it.

Tom: Just to unpack a few of those, I talk about blogging way more than I want to on this podcast, but it’s the world I’m in. One hundred percent, I did not have to make any investment. Everything we’ve put money into has been from growth of the blog. It’s been 11 years of work and I can see how it gets more passive. I hire an editor for the podcast and an editor for the blog and someone else to do images. This is all stuff I would’ve done myself 10 years ago. When you’re a blogger, you kind of wear all the hats. You need to know everything from writing to technology to marketing and just how to do it all. And that sounds similar with what you were doing with the rental units at first. You have to do everything. Then as you grow, you can kind of reinvest. That mix is what I’m getting at—where you can invest your time but then start converting it over to the money side.

Rachel: I’m glad you brought up blogging, too, specifically, because it probably is the least passive income stream in the book. You really have to be so intentional about how you set it up if you want to eventually make it passive. I included Bobby Hoyt, who is the founder of the Millennial Money Man as an example because he was able to create his blog and basically hire a whole team of writers that he has in place so he’s not doing any ongoing work. And he’s making multiple tens of thousands of dollars a month. So it is possible but it’s very hard to do.

Tom: Yes, Bobby is a great example. He’s been on the show to talk about Facebook ads. That was one of those things where, as a blogger, all of a sudden, he had to become a “from scratch” Facebook ads expert. You pick up all these skills that you weren’t necessarily expecting to when you write that first blog post.

Rachel: That’s true.

Tom: Another one I wanted to get into was scalability. This seems like another thing where it kind of just grows as you grow. Let’s say you don’t like your 9-to-5 job and you want to be a freelance writer, that’s not really scalable. You only have so many hours in the day so it’s not passive at all. You might be under your own, your own rules and on your own time but it’s not passive. In that way, I would call blogging a passive thing in that you can at least get it to a point where you are passive.

Rachel: Yeah, that’s true. It’s like a one-man-show and you’re trading your time for money. You can’t make that passive and it’s really hard to scale. It’s really all about being intentional from the get-go and figuring out how to make it passive in the long run.

Tom: Just for people that are still struggling to come up with what might work best for them, what are some of these ideas? You don’t need to list them all off from your book. Just a few different income streams that people could consider that we haven’t talked about already.

Rachel: In terms of royalty income, there’s also online courses. Anything you can do online is going to be very scalable because you can reach so many people online. I have an online course that’s another of my passive income streams. One I think is very interesting and attainable for a lot of people, is something called, Print on Demand. The way it works is you’re selling products. But if you think about the typical way you sell products, even with an online store or a boutique, you normally have inventory, right? You have to buy the product and then sell it. With Print on Demand, there are all these different platforms that have things like T-shirts, tote bags and phone cases. You upload and generate designs to go on them and then you’re paid a royalty but only if it sells. It’s beautiful because it completely eliminates the inventory risk and therefore the financial risk because you’re only getting paid if something sells. I personally do this. It’s not making a lot of money. It’s making maybe $200 a month now but we’re literally doing zero work and we haven’t in two years. When we were trying to build it up and doing a lot of work on it, our biggest month was $1,700. I know it’s possible to make a lot of money on this. I’ve seen people do it. I think that’s one that’s attainable and easy for anyone to get started. Print on Demand.

Tom: So with Print on Demand, how did you get into that? I understand the idea, but are you doing graphics work or unique funny little sayings in a font?

Rachel: Yes, you either are going to have a graphic or a text image that you upload. Now, I’m not a graphic designer.

Tom: That’s what I was wondering.

Rachel: There are two ways to do it. You can do it yourself if you have those skills. Over time we learned enough in Photoshop to be able to do text-based designs because those are as simple as it gets. But in terms of images, we outsource all of that. Two platforms I use for everything are Fivver and UpWork. You can find freelancers that will do just about any job. You can find in a designer and tell them you want 20 designs. Give them the themes and tell them how much you’ll be paying for them. They send you the designs and you upload them.

Tom: One more thing on that—what does the structure in that look like? How much is the site making compared to you?

Rachel: Oh, they’re making way more. It’s a numbers game for sure. You have to have tons of designs because not all of them are going to sell in the first place. Even the ones that do sell, you have to have a lot of them or have a large volume of sales to make anything. A couple of the platforms I know of are Teespring and Red Bubble. Amazon Merch is huge too. That’s where we sell the most. The great thing about Amazon is anytime you do anything with Amazon, you’re getting in front of so many different people. We’re making a couple bucks for a shirt, anywhere between $1 to $4 if we sell a shirt on one of these platforms so you have to sell a lot to make meaningful income.

Tom: When people are setting up their different passive income streams, are there any mistakes they should watch out for? Anything that maybe you’ve stumbled across or seen other people do?

Rachel: I think one of the biggest mistakes is poor bookkeeping, poor accounting. People struggle with that. I’m a huge finance nerd and love Excel, but I think I’m the exception, not the rule. You really have to be careful about keeping your business expenses separate from your personal expenses and tracking everything so that you can take those deductions when tax time comes. Another big mistake is not protecting yourself legally from an insurance perspective. This can apply for any different scenarios, especially ATMs. Skimmer are a huge thing. How are you going to protect your machine against skimming? For rental properties, are you going to have the correct insurance in place? One time we had a security system we were going to put into a property we were about to close on and it got broken into before we were able to get the security system up. So not just insurance and legal protection but physically protecting your assets too. Just make sure you do that the correct way from the beginning and you’ll be good.

Tom: I’ve said it on this podcast before, but anytime someone is looking to get into something new like this, there’s always a Facebook group or forum—some kind of support group. You’ll be amazed… I’m sure I could look on Facebook and find something for bubblegum machines. There will be a group out there. Nobody ever really has to do this alone. I think they can take an idea and run with it a bit and find some support.

Rachel: That’s so true. I use Facebook groups for everything. It’s a great resource for knowledge and for bouncing ideas off people. Just make sure you’re following people that know what they’re doing and that have done it before.

Tom: Good point. I had Joe Saul-Sehy on here and we were talking about not taking financial advice from strangers. I guess that would apply to business advice too. You kind of want to vet that information and not just listen to the loudest person in the room.

Rachel: Yes.

Tom: Thanks for being on the show. Can you let people know where they can find you online and what you’ve been up to?

Rachel: Absolutely. Both of my books, Money Honey and Passive Income, Aggressive Retirements are available on Amazon. Actually, the second edition of Money Honey will be coming out September 2020. I would recommend waiting for that. If any of your listeners want to download my free passive income starter kit, they can go to

Tom: Perfect. We’ll put that in the show notes as well.

Rachel: Cool. Thank you.

Tom: Thanks for being on the show.

Rachel: Thanks, Tom.

Thanks, Rachel, for showing us just how many passive income opportunities are out there and for the great tips on how to get started building passive income. You can find the show notes for this episode at Are you new to the Maple Money Show? If so, I want to thank you for listening. In case you weren’t aware, you can watch videos from any of our episodes over on our YouTube channel. If you’re interested, head over to And don’t forget to hit the subscribe button. Thanks to everyone for listening. I look forward to seeing you back here next week.

“In terms of trying to figure out, ‘what passive income should I create’...I basically tell people to start by asking yourself, doI have more time, or do I have more money, because it will take one or the other to create” - Rachel Richards Click to Tweet