Building $50K/Month in Passive Income Without Wall Street

0:00I was at the beach. Again, we love the beach. So, we're at the beach. Me and my family have our Wealth Without Wall Street swim shirts on cuz, you know, we're like, why not advertise while you're at the beach, right? And I'm sitting there and this older lady walks up and she's like, "Hey, what's that on your shirt?" And I'm like, "Oh, this is this is our company, Wealth Without Wall Street." She's like, "Oh, okay. What's that?" We start talking and whatever. And she says, "Huh?" She's like, "Well, me and my husband, we retired last year and I hope it's enough." And that and it was just one of these kind of moments where we talk about it a lot, but man, hear it from somebody's mouth.

0:40— Hope is the only thing that she had because what you just said, there's so many variables that play into an accumulation strategy, right? She has a mountain of cash, but she never knows if the mountain is big enough or if she's going to outlive it or even and here's the other part, you know, going back to just a biblical worldview. We're not promised tomorrow anyway, right? So, the fact that I have this this goal of potentially being able to stop working or retire, being taken out of service, which by the way is not biblical.

1:21I I don't want to hope that it's not going to run out like that. That is just it's just a really bad strategy. So so instead to your point focus on the variables that you can have more influence on right I don't want to say control because control is an illusion but what you can influence and it starts with your system right what I do with cash the money that is being given to me through my job through my business wherever it may be has to go somewhere and if we don't have a system that supports the idea that my passive income has to exceed my monthly expenses, then what I'm doing with money is probably

2:10Keeping me further away from financial freedom. And so, this is the framework, right? And there's a lot of details that goes into the system that I probably can't, you know, do justice on a podcast. I can do as much as you want, but the the key things I want you to think about is this. If I have a dollar that comes into my personal economy, I can either do a couple of different things with it. I can pay expenses and anything that's left over, I can either put towards qualified plans like we just talked about 401ks, IRA, 529 plans, whatever it may be.

2:51I can pay off debt sometimes faster than the schedule that was given to me. Think like a 30-year mortgage being paid off in 15 years. Or I can put it into some sort of an asset that creates passive income today. And there's there's more more options, but just if you stick with me on those three things. If I put money into a 401k and my goal is to get to financial freedom today, right, as soon as possible, what am I actually doing?

3:26I have to ask myself the question, when I put this dollar towards my 401k, does it produce a passive income today? — No. — The answer is no. — Right? — Does it reduce a monthly expense today? — Nope. — No. So, is it then if it's not increasing passive income or reducing a monthly expense and I look at that formula, is it helping me get closer to or further from financial freedom? It's actually further from — Yeah.

3:56— Right. So why would I continue to contribute to something that does not support my goal? Well, it's because we have to retrain our brain to say, man, I was told that this is a good thing for me 15 years ago when I started my first job out of college and they said, hey, where do you want your 401k contribution to be? Right? You you thought it was a good thing, — but now your goal is different and what you do with your money has to be different. The same is true with paying off debt. You know, you hear these financial gurus out there that will say, "Oh man, you need to be debtree.

4:33So any extra dollars you have, you need to be paying off your house. You need to be paying off your car. You need to be paying off your student loans as fast as possible." Well, again, think about this way. When I put extra payments towards my mortgage, does it produce a passive income today? — No. — No. Does it reduce a monthly expense if I don't pay off the debt completely? — No. Same payment. — It's going to stay the same. So, is it getting me closer to or further from financial freedom?

5:05— Yeah. It's actually further from and and I I don't know if you ever played the game cash flow that Robert Kiosaki made, but if you ever play that game, the people that win, I've never seen somebody pay off debt and get to financial freedom. — And the reason is because the monthly expenses, lifestyle expenses can never be paid off, right? Food, gas, utilities, taxes, all these things continue to go up over your lifetime and you can't pay them off.

5:38You can pay off the debt, but you still have to have some passive income to cover those monthly expenses or you're never financially free. So, that's kind of like a philosophical understanding of why we put people through a a passive income operating system that helps them to start to see things and start to reorganize their cash flows to support their ultimate goal. Does that make sense? — Yeah. Yeah. Absolutely. Yeah, I I think the the the challenging thing for a lot of people or why they're drawn or just accept the 401k option or paying off their their house option is because they don't trust themselves.

6:21And it's sort of like, well, I know if at least if I do this, I'll have some money later. And I'm not going to be that person who retires and is living in squalor and you know can't pay my bills and you know can't support myself. So at least I'll have something down the road. I don't know the best option for me. So this just seems like the default. I guess how how does somebody get comfortable not putting their money with Wall Street and trusting themselves that there might be a better way and and what are some of these other ways that you've seen work work really well?

7:01— Oh, what? So, that that's the second part of the equation, right? If I never become an investor myself, then and here's the reason most people are not investors because they've abdicated that to Wall Street. Oh, this is my financial advisor. I just give him the money and he manages it and that's how I'm doing the best I can with my money. And I would challenge you right now. You're no one cares about your money like you do. No one else stewards your money like you would.

7:35But the problem is you have to actually invest in yourself to become an investor. And what I mean by that, we actually walk people through this. It's a 12-week course, so I'll try to break it down as simply as I can, but we start with what sort of investor are you? You know, most people are like, "What should I invest in?" That's the wrong question. It's not the investment that makes you an investor. It's you. Your investor DNA, your profile, your personality profile either supports what you're investing in and you feel aligned with it and you actually understand it and can, you know, connect with that or it's completely like something you're not interested in because it has nothing to do with you personally.

8:23We focus on aligning you with the investments that will work well with you. And that's something is rarely talked about. But your personality is a big factor in your investor DNA. The second part is you have to then build a buy box, right? Based on my personality profile and the goals that I have for financial freedom. I would love for the investments that I make to have cash flow within the first 6 months. I'd love for them to have a value ad component because I want to also have an equity piece to whatever I'm investing in.

9:01I want it to have tax benefits where I can get most of my money back in depreciation in the first year or two. I would like it to, you know, fill in the blank. There's all these factors that help you design a buy box. And the reason why a buy box is so important is because once you turn on that lever in your brain to be an investor, deals start coming to you. Now, not all deals are good deals. In fact, most of them, if you're a brand new investor, are going to be bad deals.

9:33And people can smell the fact that you're a new investor, right? But if you have a buy box that's very clearly defined and we actually within our passive income lab, we actually build a custom GPT for every one of our students where they can literally take a a PPM or a PowerPoint pitch deck and dump it into their custom GPT that they've already spent the time building and it will tell them green, yellow, red for these reasons. — And you can then say, "Ah, okay.

10:05I'm really confident I need to move forward with this one or no, I'm glad I put this into the system because — it's not a good fit for me. It sounded good, but it's not the greatest fit for me. — And once you turn that on, you become a confident investor. — Now you don't have the hesitancy. Now you don't have the I don't trust myself because you've actually done the work to become an investor. You see, the idea that passive income is passive is wrong.

10:37It's actually involved. Passive income is involved income in the sense that you have to do your due diligence on the front end. You have to be an investor and that takes time and that takes, you know, effort and tools and mentorship and all that sort of stuff. You can't skip those steps. You might get lucky once or twice, but you can if you haven't really built the chops, you will lose money investing in alternatives because you just don't really have a framework that you're operating from.

11:10Does that make sense? — Yeah. Yeah. No, I think that's super a really smart way of looking at it. And it would kind of leads to a question I actually was going to ask you earlier when we were talking about passive income and that is like what is your definition of passive income? Because I've thought a lot about this and I I mean in its truest form you know I don't know if there's actually truly passive income that exists but I think we all kind of have an understanding of what we refer to as passive income which is you know money that's working for us but for you like is there a certain amount of time that if you you know spend less than this amount of time then it's considered passive?

11:56Yeah, I you know, it's going to vary depending on your your profile, right? For us, like so Russ and I, if you ever listen to our podcast, we actually share our passive income report every single month, and we'll show you the things that we're investing in, and you'll start to see a trend. What we prefer more than anything are businesses where we are in some sort of an advisory role, but we are not in the day-to-day operations. And so what does that look like?

12:28We have a land flipping business for for instance. Well, we're 70% partners in that deal. We're the capital first and we're also in an advisory role, but the 30% is a full-time operations team. Who are sending the mailers, having the conversation with sellers, who are then negotiating the sale, who are then putting it out there, marketing it for owner financing to get the the note income to come in. That business alone is over 35,000 a month gross.

13:03We we net out the 70% from that. But reason why we like it is because we do have some way to affect it. If they come to us, our operating team comes to us and says, "Hey, we have an opportunity to buy into this note portfolio where we can just jump past all the mailers and the negotiation, we just buy the end product that we're after anyway. What do you guys think? Should we deploy capital towards that?" We now get to speak into it where it's not completely like an LP, you know, limited partner in a syndication.

13:37We don't ever get calls from the LP deals that we're involved. We just get reports on what they decided to do. We don't like being in that position, you know, because we may or may not have agreed with what they did, you know, and so all that being said, in our most profitable passive income businesses, we would spend probably less than an hour a week, in like reviewing documents, having conversations with the operating team, you know, doing any sort of like followup with them.

14:12That's the that's what we ideally like the the LP investor deals that we are in. We do probably way less than that, but we also aren't as well aligned with those because again we don't have any sort of influence on the end result. So I don't know if that completely answers the question, but there's there's definitely a scale that you have to kind of commit to depending on what what works best for you. — Yeah. Yeah. And I think the the theme here is just being intentional, you know, and so you can set your own parameters around how much time am I willing to put in compared to how much passive quote unquote passive income I want to to have.

14:56And then that I'm sure drives the the decision-m around like you said what what investments to invest in. I know we talked before this, you and you and your partner Russ have invested in 21 different streams of passive income, which is incredible. After most people go through this process of, you know, the the the 12part course of really understanding how to become an investor and then setting up their operating system, where do you find most people gravitate toward in terms of the types of investments that that they're making today?

15:30So, it it it varies pretty wildly. In our investor DNA course that we put people through, they actually take their pass their, excuse me, their investor DNA profile and they match it up. We have a a 16 passive income stream kind of grid that they walk through and they see, man, I you know, based on my personality, this would be a pro, this would be a con, and these would be the resources necessary to really do this well. And they then filter it based on their own personality profile down to one or two that then they can dig into.

16:10A lot of people have found success in that land flipping or land investing niche where they're buying pieces of raw land and then turning around and selling them to retail buyers on owner finance terms. So, it's really almost like a a wholesale purchase to a retail note income and they just keep stacking that every month. In fact, even my one of my daughters has gotten into that herself. She's 19 and she's built like over 5,000 a month doing that.

16:45And so that's that's a a popular one. It's a little bit more active if you do it that way than the way we we hired an operating team to do ours. But we also have people that are really strictly focused on being limited partner investors in other people's deals like in syndications. I've heard quite a few people that are looking into like assisted living right now. I've actually had some people who have been in the short-term rental space because they're really taking advantage of all the many benefits that come with that, but they're being much more data driven, right?

17:27So, when they go in, they're not just saying, "Hey, I like, you know, this part of the beach, so I'm going to buy a place down there." They're looking at what are the the gross rents in this area? What are the management costs? If I bought a house in here, what sort of amenities would they have to have to be in the highest percentile of rentals in the area, right? How do I compete in that area? And we we recently did a webinar with the guy from STR research. I don't know if you know him, John Bianke, — but he has a really data-driven approach, — but they love it because they can get certain tax benefits in the short-term rental space and the bonus depreciation.

18:08All those things really add up to you know, a a win for them. So, it it is pretty wild. But I'll even give you one more just kind of to throw this in. And it's not it's your less conventional thing, but we've even been in the position of buying used cars. You know, these are 7 $8,000 cars that are 8 years old, some of them, 8 to 10 years old, and putting them with a Turo operator. And that Turo operator will run all the customer, you know, interactions.

18:42They do the maintenance, they do the cleaning, all that sort of stuff. They take a certain monthly fee, but everything else is net profit to you as the owner. And you also get some tax benefits, you know, with section 199A and that sort of thing. But man, on average, a six to $8,000 car can make $400 to $500 a month in net income and you can still sell the car two years later for $300 or $4,000 because it's already been massively depreciated.

19:16— So, it's just another way, you know, it's kind of a short-term rental, but just on wheels. But anyways, those are just a couple of the examples that we've seen lately.