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Comment by coffeemaniac | Hacker News Reader

I'm not exactly late in my career but having been doing this for ~7 years I'm not clear how people are able to accumulate the capital to start a business and have enough cash to live on until it makes money. It's something that seems like a great experience, and I can see myself wishing I had been able to, but I just don't know how I'd afford it.

Even assuming you have virtually no business expenses other than cloud hosting, are you just supposed to watch your emergency fund disappear?

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Bootstrapping is the magic word you are looking for.

Keep your day job, spend your nights and weekends working on your side hustle. Take the money from your day job and pay a developer to work on your side hustle while you work on the sales and marketing. Start making money on your side hustle and turn it into your day job.

Thank you, I'll google around for bootstrapping techniques going forward. Seems like one of those things where you need to know the right words to ask about or you have to really clumsily search around until someone tells you!

Of all my side projects, I've never thought of a way to monetize one. Would probably also be worth consulting an expert on that.

Build the absolutely smallest thing that someone will pay for. Keep adding features that customers ask for. Market every new feature. Reinvest everything you make back into the business. Don’t quit your day job until you have enough profits that it makes sense to go full time into your business

Yeah I love the idea of bootstrapping. It derisks the whole process with only a little downside (losing nights and weekends)

The solution for me was buying cheap houses in Detroit. For $30K you can buy a house that nets you $500 a month ($800/month rent minus expenses) so for example if you save $150K from your job that buys 5 houses yielding $2500 a month (or if you had $300K savings, $5K a month). That was the way I was able to replace at least part of my income and venture off to the land of not having a salary to free up time to pursue other projects.

That's a 20% yield if I'm not mistaken, there's got to be some catch to it.

Are those people renting a $30,000 house with $800 per month able to get banking services (and mortgages)? If not, I would feel like a dickensian landlord renting those houses to them.

Before we call Dave_TRS a slumlord, consider another perspective: The renter needs a home but can't afford the $30K to buy a house. $800 would be a basement apartment where I live, and about half the cost of what I hear studio apartments are going for in the nearest major city to my location. Dave_TRS is providing a service to the market at a price that isn't exploitative and the renter has a roof over the heads and everybody wins.

Even at a 10% interest rate and 0% down, a $30k mortgage is only $263/mo. This person is basically admitting that they are extracting value off the backs of the working poor due to unequal access to the banking system. I cannot imagine admitting being a slumlord on a public forum. And people wonder why people hate landlords.

If he got a loan, it wouldn't be 0% down because it would be on investment terms not residential terms. Chances are a $30K house needed improvement before it could be rented, and rentals are seldom free to run either -- there's ongoing maintenance, there's the carrying costs between tenants, etc. Calling the parent poster a slumlord without facts when your account is just a few hours old is pretty lame.

I wondered if there was a catch too so I started by buying one, and then expanding from there only after I saw it could work. It does feel strange buying the houses for so cheap, but I wouldn't say I feel any guilt or regret about the prices of the Detroit market. The price is what it is so I don't fault myself for getting a deal. As for $800 a month, for a freshly renovated 3 bedroom home I think the tenants aren't doing too badly either.

To the question about banking services, it's just not profitable to give mortgages on 30K homes for banks so they don't bother generally.

Huh, that's pretty interesting. How much time did managing the properties take up?

I have a business partner who is from Detroit (but doesn't live there), and still has some family there. So they are a fallback when there is a true emergency. For day to day property management and maintenance we have a network of contractors that we found on Craigslist or through referrals. Some of them stole from us or did bad work, but we didn't rehire, so eventually we developed strong relationships with reliable people.

I appreciate your honesty but I am not willing to pursue this as I feel it directly perpetuates a lot of historic inequality.

I'd always wanted to take that risk and work on my own startup and I figured this was what was most likely to hold me back at some point.

Then I found myself in a situation where I had no girlfriend, my high paying finance job started to really suck cause my manager was a total idiot, and I was located in China which has an extremely vibrant entrepreneurial environment. I had quite a lot of savings by that time and living expenses are generally quite low in China. Also I was just a touch above 25 and young so I made the leap.

I guess I was luckier and can definitely appreciate it being harder the older you get and have no good answer to that. I can only imagine it'll get worse the longer you wait though. I think Musk said something along the lines of if you see yourself regretting it a few years down the line for not trying then just go for it

I think that's why most people go to VCs or look for angel investors, although it's better to start your business with your own money.

Many, maybe most, successful entrepreneurs and creatives had (sometimes unacknowledged) support getting there.

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