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She said to me, “If I don’t sell at least 20 puppies per month, my business will collapse, I couldn’t afford it.” It was her opening sentence to the free strategy call she scheduled with me. It caught me off guard, noting that many listeners are only breeding 20 puppies or so a year, yet she NEEDED 20 per month to make it work. At this stage she was completely burned out; she was done with dog breeding—had been for many years—yet she couldn’t stop; there was no smooth transition out, nor any alternative to financially live off of.
I’ve met many breeders in this business who are getting in their later years. They have grandkids, and yet they’re working too much, missing weekends, and not spending time with the family like they want to be. It’s stressful instead of rewarding. Yet, there is no other option. They didn’t use their heyday to get them set up financially. They didn’t pay themselves a wage. There’s no social security, and no retirement. For these breeders, dog breeding is it. It’s all they know and all they have. I don’t want this to be you. There is power in choice, power in choosing dog breeding over being stuck in dog breeding.
One of my favorite quotes I heard from a nonprofit organization in their discussion over money was: “No money, no mission.” And, it’s true.
The truth of it is that this world still revolves around money. It’s the energy that flows to and from us and allows us to execute our plan, our life. Money is the breath that we breathe in when we exchange our product or service to someone else, and as we exhale that breath, we spend money as energy to whomever we purchase services and goods from. Yet, is there a way to breathe a little extra deeply? Is there a way to breathe out and use that breath to provide us security and peace, to give us a foundation that supports us beyond merely breeding dogs?
In this episode, as a continuation of our previous episode, I want to share with you options to get you thinking about your future and how to capitalize on dog breeding in a way that sets you up financially in your future—whether or not that future includes dog breeding. Of course, I have to preface this with the fact that I am not a financial advisor; this is not considered financial advice. I’m just sharing my experience and opportunities that I see to capitalize on the heyday of dog breeding, while acknowledging that there may be a day you want to take a break from breeding.
There are only three ways to make money, and I’m going to discuss them as individual things, but know that there’s a bit of overlap between them when done right. Without further ado, let’s dive in. Here are the three ways to make money:
- You trade your time for money – the simplest explanation of this is an hourly wage job, where you show up and get paid for the hours you work.
- Buying appreciating assets – which is something that will appreciate over time and can be sold later for a higher price. An example might be property in a developing area that will increase in value as the city grows. Or, it could be buying stocks, selling them when they go up in value.
- Buying cash-producing assets – The simplest example of this is buying a rental property and collecting rent from it every month.
Everything else is a hybrid of the above three things. In truth, no asset is purely passive income without a little bit of your time invested. Even if you’re renting out a single-family home and they are taking care of the yard, you still need to help them if the water heater goes out, you still need to manage collecting rent, and you’ll still need to advertise the place as available when they want to move out.
Does it make money while you sleep? Yes. Can you never interact with it again and expect it to keep paying you? No, not really,.Even property managers are a little bit of work to deal with. Even stocks need to be monitored to know when to sell.
Now, especially if you’re in the United States, you might have heard about how the wealthy pay less taxes, and this is often true. It’s hard to quantify “more” or “less” taxes, as you could be talking about the actual dollar amount or you might be talking about percentages. I think it’s generally the case that the wealthy pay more in taxes in dollar amount, but the percentage of taxes they pay as a part of their total income is usually lower. People always want to know how that’s done. While others think this is some weird loophole, it’s really not a loophole. It’s simply tax law. For the most part it comes down to one simple thing: the taxes on income from investments is taxed at a much lower tax rate than wages. You may have heard of this as passive income compared with earned income. A lot of people get mad about this, but those tax laws are available to you, too 😉, so let’s take advantage of it!
In order to do that, we need to own assets that are investments. Let’s talk about these investment options and how you can turn that heyday into a retirement. In this conversation, our goal is to discuss ways to help you establish your finances with appreciating assets and cash-producing assets. We aren’t going to focus on increasing your earning rate, but know that increasing your profit on your puppies will always be helpful if you can do it honestly and ethically.
REAL ESTATE
Real estate is a great place to start because it is usually something easier to understand, and it’s made many people wealthy over the years.
From a cash-producing aspect I like the idea of owning rental property. One paid-off rental property could bring you in $1000-$2000 per month, maybe more. You have lots of options when it comes to selecting rentable real estate. Most people think of housing, but you also have commercial real estate, which would be renting out buildings or land used for businesses.
Let’s say you were looking at purchasing real estate housing. You have a few options. You could purchase a single-family home, like a 3 bedroom/2 bathroom, but you’ll want to make sure you have a good contract in place regarding the yard maintenance, who will do it and how it will be done. This exterior maintenance is the hardest part to manage. Plus, you’ll be responsible for things like the roof, maintenance of the appliances, furnace, and air conditioner. It’s all doable and worth it for the right price, but there is a little bit of knowledge involved.
To keep things simpler—potentially a lower threshold of entry—you could opt for purchasing a condo or two. These can bring in nearly the same amount of money per square foot, sometimes more, depending on amenities of the facility or the location. However, you’ll generally be paying an HOA fee, the Homeowner’s Associate Fees, which generally cover trash services, sometimes cover water, but more importantly, they generally cover landscaping, the roof, and the building exterior, which takes a lot of stress off of what you have to manage. From that point, it’s mostly cosmetic stuff you’ll need to manage, along with the furnace and air conditioning.
I had a condo for a while and it was fairly easy to manage, but the people didn’t always want to stay as long. A lot of that was the location and the transient traffic that was coming and going. It was similar to an apartment in function.
Additionally, with these sorts of properties you have the option for Airbnb-style rentals instead of long-term rentals. There is definitely more work in Airbnb renting. You have a lot more to manage and to support your people with, between cleaning the place for new guests and changing bedding, answering questions, and stocking the snacks, but the money was pretty good. For me, renting my condo as an Airbnb brought in about 3-4x the income, but was definitely more than 4x the amount of work.
So which made more sense for you would depend on how this all fits into your bigger picture. For example, you might have fewer litters, so you have more time to do Airbnb, or you might find that Airbnb makes you more money because you found the jack-pot of cleaning ladies. For me, it was always finding the time to get it cleaned that was hard. It was never a big deal messaging the people and helping them with things like how to adjust the temperature.
You might also want to do all the work at once because you can manage it and have a good flow, which allows you to capitalize on the additional cash flow that you could either put toward paying off the property OR you might use it to improve the property. For example, you might want to change the countertops to granite, put tile in, or remodel the bathroom, anything you can do to improve the property AND the income it generates. On the other hand, these improvements can be used to make the property worth more money, which gives you the ability to sell it and turn it into another property within 180 days at no cost in taxation through a 1031 exchange.
I was lucky. I had been wanting to sell my condo, but I hadn’t done anything about it. One day I received a letter in the mail offering to purchase the condo for cash. The only problem was it felt like too little for the property. I called the guy a little later and discussed how my property was set up as an Airbnb and that I could transfer it as an Airbnb to him, allowing him to make much more money on it, including the opportunity to work with my amazing cleaning lady. He ended up coming up 29% in his offer when purchasing it!
This brings me to an interesting hybrid approach with appreciating assets. Sometimes you can buy a property and make improvements and sell it. This is akin to what you might think of as a “flip,” like when people say they flip homes, but it applies to a lot of assets. You can buy a broken-down house and improve it and sell it. You can also do this with land that is undeveloped—meaning nothing is on it—then you can build something on it, then sell it for more. Maybe your husband is a great mechanic. In this instance, you could take the dog income, buy some vehicles that aren’t operating, he could do the necessary work to get them running, then sell them.
These “flip” projects are a hybrid of buying appreciating assets, but you get the appreciating asset by exchanging your time and labor. I’ll caution you though. This only makes sense when the time invested is something you can do easily, generally in your normal course of work. For example, if your husband is an accountant and occasionally rotates your tires, signing him up to fix cars on the side probably isn’t going to make much money.
Bill, being in construction, allows us the opportunity to buy real estate and either build on it or remodel it for a much better price than if we hired someone to do the labor. The key, though, is that we are doing the work on something like this, and so that has to be factored in against your other activities and how much it takes you away from dog breeding. It’s important to find a balance.
For me, I suggest starting small and then, when that’s working okay, diversify a little more and add to things. For example, you might buy a condo, get a long-term renter, pay it off with rent and dog breeding income, and then do a few improvements. You could then decide to do a second condo OR you might decide to sell your condo at a profit, then take the money and invest in another real estate endeavor, maybe buying a duplex or two smaller condos or a nice place for an Airbnb. There are lots of options, but, like in dog breeding, make sure it works for you, your time, your skill set, and your overall financial plan.
It is exciting that you could get to a place where you had 2-4 rental properties netting you $4-6K per month with little work.
Okay, well that’s a brief overview of real estate opportunities, but let’s dive into a different type of ownership: owning businesses.
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OWNING BUSINESSES
When owning businesses, you’ll be the benefactor of the profit from that business. There are lots of opportunities in buying businesses and Cody Sanchez (you can find her on YouTube) talks about so many of the “boring businesses” that rarely fail and produce a lot of income. She frequently talks about businesses like laundromats, car washes, storage units, and dry cleaning. They are not glamorous businesses, but they are needed, and make a fair amount of money once the system is in place.
You could also capitalize on your knowledge and experience with dogs, and build yourself a boarding facility or grooming business. These businesses can be managed, and don’t necessarily require your everyday time invested, but they are work, and will require some work to get off the ground. Regardless, there is always a base amount of expertise and knowledge you need in an industry to give yourself a competitive advantage. As a breeder, you have unique knowledge and understanding of dogs, even just from the fact that you’re working with more dogs than the average person. So you can capitalize on that information you have with a dog-related service business.
There are other, bigger opportunities for owning businesses that require more investment, like buying a franchise. But what’s nice about a franchise is that they have the system, and that’s what they are selling you. Franchises run from $50K-$500K just to buy into them, which allows you the rights to open them up. It doesn’t cover the cost of the building and such. The cheaper ones are things like specialty coffee shops or those fancy cookie places, while the larger ones are often McDonald’s or Culver’s or other fast-food chains. They give you all the training and they get you set up. The beauty of a franchise is that the risk of failure is greatly reduced, as opposed to starting your own restaurant from scratch. They aren’t for everyone, but they are unique opportunities.
Before you invest in any of these businesses, please research the business and the ins and outs. There are YouTube videos on everything. ChatGPT can help you see where the businesses might have problems, where you can brainstorm if it’s a good fit for you, as preliminary research. These are just basic places to start to see if it is a good fit.
Quick caution: lawsuits are everywhere. The joke is: “It’s not if you’ll be sued, but when.” It illustrates that this is often a part of business, and one of the simplest things you can do to protect your assets is to have one company, like an LLC, own the business, and then have another LLC own the land. Have the LLC that operates the business rent the land from the LLC that owns the land. This way, if you’re sued, then your land is not a part of the lawsuit. Again, I’m not a financial advisor, but this has always been standard practice and discussion in business school for asset protection.
What I love about most of these businesses is that, once they are established, they can run with little of your time invested. Obviously, some are more and less to kick off, but they can get to a place where you’re rarely needed, and the business keeps making money. Isn’t it cool when our success can turn into success for other people by providing them jobs and opportunity? I love that.
Let’s look at another opportunity for where to place your money…
CRYPTOCURRENCY
You have probably heard of cryptocurrency, often referred to as crypto. Some people still call it Bitcoin. For some of you, it may sound like a complete mess of confusion, or a good way for the black market to operate. While cryptocurrency is something that is confusing at the onset, it is a really incredible asset and technology, and one that is no doubt going to be a part of our future.
In the past five years, I’ve invested money into cryptocurrency and, while there have been some volatile moments, I am still up 200% on my money, meaning in just five years I have doubled my money, and I’m not really doing much. I’m not day trading—although I have, and it’s fun—but I’m able to throw a bit of money in there when I have extra and it just grows. I monitor it here and there, I watch a few people on YouTube a few times a month, and I keep my finger on the market a bit. I find it enjoyable and absolutely lucrative. That said, the crypto market is known for its ups and downs. Some days it can swing dramatically—even 10% or more—but over time, I’ve found it worth the ride.
If you have no idea what cryptocurrency is, I’ll try to explain it in some short and sweet terms. I should start by saying that there are many different cryptocurrencies, thousands of them. Sometimes they’re referred to as coins. Bitcoin is one of these coins. Despite being called coins, there are no actual physical coins, it is all digital. The value of each coin comes from its usefulness and how many people trust or want to use it. For example, Bitcoin is often seen as digital gold, while other coins are used to run apps or perform functions on their networks. Your particular crypto will be stored in what is called a wallet, which operates like an account in the banking system you’re familiar with. Within a wallet you’ll have a specific “address” for each type of crypto you hold inside that wallet. Later on, you can explore more secure options like cold storage wallets, which store your crypto offline for extra protection—but that’s something to look into once you’re more comfortable.
What is crypto? It is a series of technologies that perform specific tasks—often automatically—based on a set of coded rules. These are sometimes called “smart contracts,” and they’re used to carry out actions like sending money or verifying information without needing a third party.
One of the emerging main designs of cryptocurrency is around creating a digital financial system: a way to move money or execute financial contracts across the world between two parties without the need for a middle man. You just use that specific coin, designed to do what you’re asking, then the transaction happens, safely, securely, and quite quickly.
Instead of having a third party monitoring the transactions, the code is written with rules that must be followed for the transaction to work. This prevents anyone from cheating. It is further very secure because it uses a sophisticated system for record-keeping. Essentially, it stores the data for a transaction on thousands of computers individually, meaning that, if a hacker wanted to change the transaction or try to delete it, it would need to be deleted on every single computer individually, which makes it virtually impossible. They call this blockchain technology.
When you put your puppy sale money in the bank at Chase, you aren’t worried that the money will be there in the morning. It will be there. Chase is reliable! However, this is not the case for many people around the world. Either banks are not reliable in maintaining their balance of their account—they could wake up and the money is gone—or they don’t even have banking institutions available where they live. All they have is a cell phone and the internet. These people are often referred to as the “unbanked.” and there are so many more of them than you would believe, close to a billion people around the globe. Crypto is an incredible solution for them that they are already using today for everyday transactions at farmer’s markets, in third world villages, and emerging economies in countries where the monetary system is volatile and unreliable.
Crypto is designed to eliminate the middle man, open up financial freedom to the people, and prevent corruption—all from your phone. It is the future, and it is already integrating into banks and the world economy. Governments and banks are starting to take it seriously—some are even developing their own versions—so it’s clear this technology is becoming part of the global financial system. You might as well jump in.
If you aren’t sure where to start, you’ll need to do a few things:
- Download an exchange on your smart phone – This is the app that will facilitate you buying and selling crypto;
- Verify your identity – This usually means taking a photo from the app of your ID, providing your social security number, and often a facial recognition video. It sounds scary, but it’s very secure.
- Connect your bank account – usually this is done with the service Plaid. But if you aren’t comfortable with them, you can use the manual verification with deposits.
That’s it! You’re ready to buy! I have a cheatsheet you can download with the steps and my recommendations for which apps I use and would recommend to a friend, as well as my top three cryptocurrency picks, the ones I believe have the most potential and will be a safe bet. I don’t want you chasing volatility, but I do want you making money.
How can you integrate cryptocurrency into your plan? It’s pretty simple. You can place a certain percentage in there, such as 10% or $100 from every puppy. For me and Bill, we don’t use a standard 401K or IRA. Instead, this is where we put the money that would be considered our retirement savings. If you are looking for the tax advantages of an IRA or similar, there are firms that can help you structure your crypto assets into a tax-advantaged account.
You can also use crypto as a place to invest and store some money as you are working to build more income to invest in something like real estate. I want to note that, when you sell any cryptocurrency, you will create a taxable event whether you have a loss or gain, but it is fairly easy for your accountant to manage. We also invest in real estate and have our businesses, so we are diversified, which I think is important for anyone.
You should have an emergency fund, dog debt paid off, then take that profit, pay yourself a nice chunk, and use the extra to intentionally fund a financial future that’ll take care of you whether or not you can breed dogs.
In the next episode I’ll talk about deciding to build a facility, and how to determine if you should spend that extra profit on your facility or if you should invest it in some of the options I explained today.
