Hello readers! Today I need your help making a pretty big decision. I know that many of you have backgrounds in fields such as business and finance that I can selfishly leverage on this blog. Since I’m just a lowly scientist with a penchant towards personal finance, I need your advice on two side hustle options that we are considering at The Drunk Millionaire household.
Both of these ideas originate from the mindset of utilizing all available resources to either (A) save money or (B) earn money. As you’ve read in previous posts, we landscaped our yard with edible plants to lower our grocery bill. By implementing one of these ideas, we will attack personal finance from the other vantage point.
Side Hustle
These side-hustle options fall under the (B) earn money column, and could possible speed up our timeline towards Financial Independence (FI) by increasing our income.
These options will utilize a nearly new (very large) shed that is sitting in our backyard which we really don’t use much. It is very well built, but will need some level of investment to bring it up to side hustle scale.
The first option we are considering is turning it into a boat and RV storage facility. The investment would be minor and the payout would likely put a huge dent in our mortgage (if everything goes as planned). The second option is to start a wedding venue, which should provide much more (potential) income, but with a much larger initial investment. The storage option would be more passive in nature and the wedding venue would take more sweat equity to actually make it happen.
Here are the two options broken down and analyzed with a list of pros and cons. Keep in mind that our end goal is to have the assets on our property produce enough income to nearly cover our monthly mortgage expense. This would free up even more income to invest more, spend more, and give more. So lace up your constructive criticism shoes and read on…
Option 1: Boat & RV Storage
As mentioned above, this is the lower risk, lower reward option. Our house is conveniently located on a road that connects a large city with the only recreational lake in the area. This means we see boats driving to and fro every weekend past our house on their way to a weekend on the lake.
Pros: Utilizes only property we own, close proximity to lake/recreation areas.
Cons: Strange people at our house, facilitating movement of stored vehicles, time commitment – i.e. are we trading time for money and I could trade time for money doing something else for greater income(?).
Investment: The only major investments I forecast are to add gravel to the floor of the shed (~$1,500.00), signage in our front yard and advertisements (~$350.00), a very robust umbrella insurance policy (~$500/year), and some sort of video monitoring equipment ($250.00). This brings the first year’s total expense to around $2,600.00, with the recurring yearly insurance fee.
Competitive Analysis: Other storage options are available in the area, but they seem to only offer overhead storage (you can park under a roof but not in a building with walls). They seem to charge anywhere from $600 – $1,000 a year for storage depending on the boat/RV length.
Setup: The following picture depicts (to scale) how many boats/RVs we could store. This will depend on the size of the vehicles which makes me think we should charge by the length (per foot).
Income: Assuming we filled our shed to capacity (a big “if”), we should be able to fit ~12 boats/RVs. If we charged $600 for (6) 17’ boats and $1000 for (6) 30’ boats we would have a gross income of $9,600 per year or $800/month. This would not completely cover our mortgage, but it would knock off a significant chunk. Net income would be around $7,000.00 minus taxes.
Option 2: Barn/Farm Wedding Venue
Nick Loper over at Side Hustle Nation preaches utilizing your unfair advantage to leverage success with your full time job, or side hustle. With this wedding venue side hustle idea, our unfair advantage is the beautiful scenery and suitable facilities located on our property.
I got this idea after going to my brother’s barn wedding in Indiana earlier this spring. Their wedding venue included an old barn for the wedding, and a large building for the reception. We have the shed on our property, but the additional acre/barn next to it is owned by the farmer who farms the acreage around our house. More on that later…
Pros: The framework for beautiful weddings is in place, lack of competition, big profit potential
Cons: Much greater investment to bring facilities to wedding-shape, greater time commitment, giving up Saturdays for 4-5 months out of the year.
Investment: As I mentioned above, the barn (pictured below) is a large expense that is key to this plan getting off the ground. The farmer has already asked if we were interested in purchasing it but we haven’t negotiated on price yet.
I would buy an additional 1-2 acres with the barn as well to facilitate parking. As we don’t have all of the cash necessary to purchase the property, we would have to take out a loan, or work out a purchase plan with the farmer. I guesstimate the value to be around $30-40,000. The additional acre would be planted to grass and would serve as a parking lot for wedding guests.
Thankfully, barn weddings are rustic in nature so the only other investment in the barn would be cleaning/updating electrical needs, and perhaps some DIY landscaping.
We would also need to invest heavily in the shed which would be used for receptions. This includes a concrete floor (~$10,000.00), tables/chairs (~$5,000), chandelier lights/fans ($3,000) and bathroom facilities. We could always rent porta-potties as this seems common with farm wedding venues until we had the cash flow to build separate facilities. In addition we would also take out an insurance policy.
We would hire out much of the menial labor associated with weddings including lawn care, after wedding cleaning, etc. This should allow us to minimize the daily workload associated with this side-hustle. The long term goal would be for my wife to oversee this venture and quit her job to facilitate tours/bookings, etc.
Competitive Analysis: This is the good news. There is only one other barn wedding venue in our area that serves a fairly large community. They seem to be booked throughout the spring, summer, and fall and have very similar facilities to what we could offer. They offer different packages ranging from barn only ($5,000.00) to barn and reception hall ($8,500.00) for the day. They also offer up-charges, like rehearsal dinners, and $500 per extra hour after 11:00PM on the wedding day. I may be biased, but I think our facilities would be nicer, with better scenery.
Setup: I believe our maximum capacity would be about 160 people for both the wedding and reception. The picture below (to scale) demonstrates one potential setup for the reception hall. As mentioned above, the barn will not need adaption, and we have space to line up chairs for the event.
Income: If we were to host weddings from May through September, we should be able to host approximately 20 weddings. Assuming we undercut the competition the first year and have packages around the $5,000.00 mark, we would have a potential income of $100,000.00 minus expenses and taxes. Assuming we were able to book well the first year, we would raise prices the second year to match the competition. The potential income from this option would not only pay off our mortgage, but also allow us to reach FI much sooner. This would obviously come with large upfront costs, and a lot of sweat equity.
Wrap-Up
We are honestly pretty torn between both side hustle options. Option 1 seems less risky than option 2, but option 2 has the potential to put jet packs on our trip towards FI. If you’ve read this blog for more than one week, you’ve realized that I’m very adverse to debt, so option 2 seems very uncomfortable. There is a chubby bald little Dave Ramsey that sits on my shoulder yelling Debt is Dumb! 😉
Gosh this is a tough choice, I can see how you two are pretty torn between the two options.
I love the idea of putting the jetpacks on to reach FI quickly, but option 2 is considerably more risk. Not only buying the barn and land, but potential Mrs. Millions quitting her job to work it as well. And on top of that, there is steep competition. To make a fulsome decision, I would want to more about how big of a city you live by and if you really think there is demand for two barn wedding venues. I’d also be nervous if the competitor would act irrationally to try and drive you out of business if there really isn’t enough demand. Tough considerations to analyze there.
Alternatively, option 1 offers some nice extra cash with little risk. How much would one of those sheds cost? The nice thing about option 1 could be the optionality to add another shed down the road if you have enough demand. You could add a low-cost shelter (roof only) and offer two different pricing tiers eventually… a lower price shelter only, and higher cost for the full enclosure.
Tough choice. Based on the info at hand I would lean toward option 1, but would love to bounce more ideas around with you. Email me if you wish.
Thanks for your analysis! I forgot to mention that we had also considered renting the barn/property for the first year to validate the model before we jumped head first into option 1. Great ideas!
As much as my 5-cents is worth, I’m with Green Swan on this. Option 1 is an easy choice if you prefer the status quo and are happy with the relatively low return and passive income.
However, option 2 does give you the chance to get a huge leap forward financially if it pays off. And if you’ve done your research and the indicators are that it’ll work, then the risk of entry is much lower.
Unfortunately, as always, the option with the biggest return will take the most effort but could be worth it for a few years to build the business to the point where you can hire staff to do most of the work.
Another option may be to set it up as a venue and contract out the catering etc.
Good luck with whatever choice you make. I look forward to hearing how it goes.
Hi again Drunk Millionaire, I’ve given your proposals a bit more thought and, to throw a bit of cold water on both ideas, I think that you have underestimated your set-up costs for both.
In option 1, you are going to have to provide some sort of 24-hour access control that will allow owners to pick up and drop off their toys at any time. This means that you will not only need to have some sort of access control to get into the place but also security to ensure that they only have access to their toy, not the better one down the row.
Next, fire control. Not just a fire alarm system but possibly a suppression system, such as sprinklers, as well. You may have millions of dollars worth of someone elses property there and they will want to know that it’s safe. This may also have implications on your insurance.
With option 2, I doubt that you will be able to convert the barns into rustic wedding venues with a bit of a tidy up and adding tables and chairs. I suspect that there will be very strict safety regulations you have to comply with including fire exits, emergency lighting, fire alarm systems etc. These usually get stricter with venues that serve alcohol.
These are only a couple of potential dampeners you will have to be aware of if you go full steam ahead building either option as a business.
I’m sure that you will come up against these roadblocks as you do your due diligence and I would not want to discourage you from pursuing them, but take it from someone who has been burnt by not doing his homework, you want to make sure you go in with your eyes wide open.
Great points Martin!! 😉 Thanks for your advice.
I agree- both options will likely require much more work than I’ve initially assumed. The idea of letting people access my property (option 1) 24-7 gives my wife chills lol. With the wedding venue, the benefit would be that these interactions would be limited to only one day a week for a few months. I’m totally in the dark as far as regulations go, but I plan to reach out to someone with a wedding venue in another city soon to hopefully illuminate these unknowns.
You’ve been given some great ideas and things to think about by both the GS and by Martin. We just went to an event reception in a similar setting last night (and they just got started) I believe it was a stable that didn’t pan out – see https://www.theknot.com/marketplace/old-hickory-farm-weedsport-ny-960086 The managers are my husband’s high school classmates. And since I am reading that you are “torn” – I might suggest some of this is the decision-process you are following too (my doctoral work was focused on decision analysis). You could make a great case study if you are interested (for free of course!) You can look at my post on Financial Samurai – http://www.financialsamurai.com/how-to-make-better-decisions/
Hey Vicki! Thanks for those links! Your guest post on the Financial Samurai is excellent, and I would love your analysis of my current options.
More people get married than have boats. I agree with other folks that you are underestimating the costs. Including licensing and compliance etc. There will be some extra headaches with weddings because “most important day of life” drama, but I think it would be the optimal use of the property.
Thanks for your advice! I need to reach out to someone who hosts weddings in another area to help determine an accurate cost analysis for the wedding venue idea.
My instincts (after reading some of the points on security and access) say wedding venue.
People are more emotional about their wedding than about their boat storage. That extra emotion means a greater margin.
If it falls apart as a venture after you’ve put some money in, could it more easily be converted to be rented out to holiday makers?
Great points! I totally agree that weddings are highly emotional and that’s why the average wedding is over $25K!!
I think that our updates could provide other income streams as well. For instance, we live near a huge university. Many of the frats rent out barns for barn parties on a Friday night. This could provide income (~$1,000) in the off season.