Epic Real Estate Investing - Step By Step to Get Out of The Rate Race & Create Passive Income Part 2 | 708

Episode Date: July 9, 2019

Mercedes created the series on how to create passive income! In today’s episode, learn why passive income does not mean uninvolved income, the new and the only way to escape the rat race, and why you should not create piles of cash. Learn more about your ad choices. Visit megaphone.fm/adchoices

After the epic intensive, I see myself going home and putting more energy into real estate investing and gaining more experience and coming back next year with three to seven properties under my belt and just being able to offer my experience to people that were in my shoes this year. Hey, Matt here. You know, everyone is talking about real estate investing, right? It sure seems so. I mean, everybody wants to get in on the action. And we all know that finally. finding off-market deals, it can be tough. It can be really tough. But what almost no one understands about real estate investing is the concept of finding truly motivated sellers. Because it's not spending more on marketing to finding these motivated sellers that helps you buy discount of real estate.

It's setting up a really good automated lead machine that finds quality sellers around the clock. And that can happen. Even if you can't stop trying every new strategy that you see at the RIA clubs or hear about on a podcast. as long as you're also contacting your leads, setting appointments, and making offers. And before I forget, if you like the sound of where this is going and you want to go deeper, you might like to attend the live three-day Epic Intensive Lead Machine Workshop.

It's July 18th through the 20th. And if that sounds interesting, then head on over to Epicintensive.com. Get the details. That's Epicintensive.com. All righty. Now let's get on with the show. This is Terio Media. So you want to be a real estate investor, but you don't want to do the work.

If there were only a way where someone else could do it for you, now there is. Tune in here each and every Tuesday on the Epic Real Estate Investing show for Turnkey Tuesdays with your host, Mercedes-Torres. Hello and welcome. Welcome to Turnkey Tuesdays bought to you by Epic Real Estate Investing. My name is Mercedes-Torres. I am your turnkey girl, and I am, lucky enough to be partners in crime with Mr. Matt Terrio, the gentleman who created the epic real estate

empire. This is a real estate investing show for busy people. Busy people just like you who understand the importance of real estate just don't have the time or desire to learn every single nuance there is to learn about creating passive income and producing real estate for you. This is a show that I created based off of my personal experience, the experience that Matt and I have had together. So if this is your first time here, welcome, my friends. So glad to see you here. If this is not your first time here, welcome back, my listeners. So a couple of shots out to a couple people out of the many that have closed properties to create passive income in their world. A huge congratulations to Mr. Renee S from Los Angeles, another police officer from the Los Angeles area.

He was referred by a fellow police officer by the name of Justin, and he just closed on his first investment turnkey property. So congratulations to you, Renee. And then Alvin, Alvin G. Congratulations to you, sir. You purchased two back-to-back properties and kudos to you. My friends, that is only two of our investors that closed property this week. There is about eight of them that closed. So congratulations to all my investor friends that are now creating passive income in your world. So this week, we are going to be resuming a multi-part series that I started last Tuesday called a step-by-step plan to get out of the rat race and create passive income. Now, one of the reasons that I created this step-by-step process is because a very common question that I get on a regular basis is Mercedes.

How did you and Matt escape the rat race and how long did it take you? So I will be the first to share with you, my friends, that it is very possible to escape the rat race. And what I've discovered is many of you have. the potential to do it. You just don't know how. So I decided to break down the how to do it in hopes to get your wheels turning at the very least. I often say on our show, the purpose of me doing this podcast is really to show you that you can do it too. Now, you can always reach out to me and my team. We are absolutely here for you. We're here to help you. We're here to watch you grow. And most importantly, we are here to help you make a financial difference in your world.

So last week, we left off with the Investopedia definition of passive income. And they describe passive income as earnings and individual derives from an investment, limited partnership or other enterprises in which he or she is not actively involved. Popular culture, however, sees it more as any money you earn while you're sitting on the beach sipping margaritas. At least, I like that definition of it, but for the most part, people kind of think passive income is just that. Money coming in without doing a darn thing. And in reality, it falls somewhere in between the two. Defining passive income as the money you earn from a project or an invested after you've made an initial contribution of time or money is really what passive income is all about.

Most that pursue passive income think it's all about getting something for nothing. Now, passive income does have that get-rich, easy appeal, but in the end, it still involves work. The majority of the work, however, is up front, but the work really never stops. Countless people have tried to create passive income, streams of income, only to be surprised and frustrated by the amount of work, cash, or time that is involved. For passive income, the most passive that it can be, you will have to think of yourself as a manager of managers. For example, Richard Branson doesn't run 400 companies that he started. But what he does is he reviews the numbers on a regular basis to ensure proper performance of all of his companies.

Then he calls all his CEOs with any concerns. Whether you're a titan of business like Sir Richard Branson or a landlord of a single duplex, Passive income does not mean uninvolved income. I'm going to repeat that because it's really important. Passive income does not mean uninvolved income. That's a misconception that lies at the center of the frustration that investors experience when attempting to create passive income for themselves. Now, now that that myth has been revealed, don't throw in the towel and revert to your old ways of thinking.

Give me a moment. Don't give up the pursuit of your passive income dreams now that we've lifted the veil, so to speak, because I will say it is very possible. Although the term passive is not really literal, passive will say, passive will say, still get you much closer to financial freedom than toiling away from active income wherever you can get it. Now, here is how to build passive income. The key idea here is leverage. You must be able to leverage other people's time, other people's money, other people's credit maybe, other people's period, to create passive income. Now, going back to Richard Branson, he does run 400 companies because he isn't actually running all of them at any one given time. His CEOs are. Again, think of yourself as a manager

of managers. The more you do, the more passive your income will feel. Your sustainable passive income will be a result of you creating or acquiring a product or a service that people will continue to purchase from you on a regular basis long after the work it took to put together is all done. Examples of passive income include like royalties from books, for example, movies or royalties from songs,

maybe a software that you created, inventions, as well as like internet marketing and information affiliate products. Any dividends that will yield a return like stocks and bonds, but dialing in on just the right product, service or investments with predictability and stability and longevity to support you in your golden years is really no small feat. Further, I think it goes without saying that the insane amount of upfront work and study that is going to be required prior to your income actually becoming passive won't happen overnight. Nothing. happens overnight, my friends, to be quite honest. We all know this, but the creation of passive income doesn't happen overnight. Now, human basic needs, like food, clothing, and shelter

inherently embody the necessity that is demanded by society today, and that demand is required for long-term passive income. Additionally, these are really easy concepts to understand. The reason I mention this is because a confused mind does nothing. A clear and focused mind produces results. The sustainable aspect of passive income from these sources exists by humans, replenishing and maintaining these needs regularly. And unless the need for food and clothing and shelter somehow goes out of fashion,

the passive income derived from these needs can provide you. And not only for you, but for your family, your generations to come, it could provide stability for your financial future. So let's look at food first. we've all heard the failure rates of restaurants. The restaurant business failure rate is about 90%. That number is actually wrong. According to recent studies, the failure rate is closer to 59% of new restaurants fail within their first three years. But still, a 60% failure rate aren't that. the type of odds most people are comfortable banking on, especially when it comes to their financial future. And not to mention, it takes really specialized knowledge, experience and somewhat of an extraordinary effort and, of course, financial backing to turn a restaurant into a good

restaurant number one and to have that good restaurant produce passive income. to make it a passive income machine. So, with regards to clothing, the Bureau of Labor and Statistics rate that the garment industry, and this is specifically design, wholesale and retail, it is one of the top 10 riskiest businesses to start. As last year's skinny jeans may have a great look on you for one years, your customers may not find them so flattering.

So clothing is risky. It only takes one slow season to leave you buried in inventory. And most entrepreneurs, they really don't have the reserves to survive such a session, let alone when times are good, marketing budgets are to keep you up in the limelife. or even to get you to complete with giants like Nordstroms and Macy's and urban outfitters and the gap, marketing budgets can take a steep toll on your business. With success in the industries of food and clothing being such long shots, shelter is what most are left with with their best option for passive income.

And this is one of the reasons why Matt and I love real estate investing. Because it provides shelter, one of the biggest necessity of mankind. If not, the biggest. This perspective gives credence to real estate being taunted as the final frontier where the average person has a legitimate shot at creating real wealth. You hear Matt saying that all the time. And of course, I borrow that term because I am a firm believer of that same thought process. Real estate, my friends, it's a simple business.

In comparison to the previous two that I mentioned, the barrier to entry for real estate is low with regard to price and experience. And it's a life-changing opportunity. not only for you to create passive income, but for you to provide shelter for families that absolutely are not able to afford buying their own homes. Now, this could be life-changing because it could be created relatively quickly. It's no wonder that real estate has created more wealth than any other industry or investment vehicle on this planet and the fact that 74% of the nation's wealthiest, 1% of those either made their money or part their money in real estate of some way, shape, or form.

Just in case the get-rich alarm just went off in your head, understand that real estate is not about getting rich quickly. Although it is a quicker vehicle to riches than the alternatives available to most people, it's about getting rich permanently. Big difference. And you've heard my story. So rather than boring you with my story, I'm going to share another story with you,

which I actually have interviewed on our podcast. Enrique, Enrique lives in Los Angeles, California. He was a guest on our podcast, I don't know, about maybe eight months ago. And when we met, probably two years ago, he worked for a gas refinery. And he worked long hours, weird shifts. And while he really enjoyed his job, he quit if he was given the opportunity, because honestly, I don't think he was 100% fulfilled. Well, he had just read the book, Rich Dad, Poor Dad, when he reached out to me.

And it inspired the thought of passive income for him. That's what that book does for you. It inspires people to think outside the box and to really grasp the concept of creating passive income for yourself. And at the end of the day, it really renders most people unemployable. I mean, this book certainly turned my life around. Matt talks about it all the time turned his life around. Because if there's something about that book that it does, it helps you see that it's possible.

However, there is a place where the book falls short for most people. And not talking bad about the book, because I've actually shared my same thoughts with Robert Giyosaki himself. But, and actually, when I shared that with him, it is when he started referring his clients to cash flow savvy. But the part where it falls short is the how to part. Rich dad, poor dad, doesn't teach you how to create passive income. It teaches you the possibilities of passive income,

but it doesn't teach you how to do it. It gets you all excited about a new way of living, but it leaves you hanging a bit. And this is what makes the difference for people. And your new enlightened state, at least Enrique's new enlightened state, was I know that I can create passive income. I just don't know how to do it. So when Enrique met me, he hired me and I walked him through the entire process. And it began with really analyzing his financial, what I call buying power, but where he stood financially in the world of real estate and real estate investing, we talked about, you know, reducing expenses

and acquiring income producing real estate. And just recently when I interviewed, he shared that 80% of his expenses were being covered by the passive income I helped him produce with his. properties. Take a listen to that episode to hear what he shared. Now, his monthly passive income has almost surpassed his monthly expenses. Now, he's still working at Chevron. He's not working as much, not working those crazy hours, but was amazing is now he gets to choose if he wants to continue to work. Now, he's been taking more of an active role because he really found that he's really enjoying being a real estate investor. But can you imagine that creating enough passive

income in your world where you can decide if you want to continue working? Now, enough about him and enough about me, let's talk about you. So let's talk about you escaping the rat race. Now, if you had passive income working for you like Enrique does, what type of income would that have for you? If you think about all the time you haven't had passive income working for you, how much has it cost you to not have passive income? Right now, you've got a choice to make.

You could keep going on and creating the financial life that you've been providing for yourself, or you can keep about creating financial freedom in the ways that you've been doing it, or you can try a new way. This new way is the only way you'll ever escape the rat race. So let's talk about that. Now, let's talk about the term rat race. I know you all know that it's a metaphor. And if you're listening to the show, most of you know what rat race is,

but it's used to describe a person's situation in which they find themselves financially trapped by their circumstances, regardless of the amount of time and effort they put forth. The best they seem to do is they stand steel. Financial obligations that they've collected over time and over our lives, such as mortgage and rent, car expenses and doctor bills or student loans, daycare for our little ones, or insurance, and activities for your kids. Oh, my goodness, my kids' karate and his baseball is over the top.

I mean, there are countless over other expenses that we can discuss, and they can literally render us slaves to our jobs. In the most recent survey by Forbes, 56% of Americans say they have less than $1,000 in their checking and savings account combined. 76% of Americans are living paycheck to paycheck and are at serious risk of financial ruins should the slightest thing change in their world. The highest paying jobs of society often aren't enough to escape. As a result, people tend to stick with their jobs that they dislike for fear of jumping out of,

of the frying pan into the fire. With a few, and that is very few exceptions, it's our pursuit of active income that keeps us in the rat race. It's passive income that will enable you and will empower us to escape. In fact, you really don't have a chance at any sort of financial freedom unless you do figure out how to create passive income in your world and maintain it. Why the challenge, though? Why do so many struggle with creating passive income?

We really don't have to look any further other than your personal definition of wealth. Your personal definition. Most of us were raised thinking to be wealthy, meant to have big piles of cash somewhere. Now, I've made it a little bit more clear, I hope. That may be true for a while. Actually, some time ago, that was true. But without getting too deep into economics, in a nutshell, that's not the case today. So in 1974, when President Nixon took the U.S. dollar off the gold standard, it essentially guaranteed inflation. It was from this day forward that that pile of cash, people started to lose money with just their pile of cash because

inflation now causes savers of money to actually be losers of money. They changed the rules of money. They changed the rules on us, but nobody told us. Do a little bit of research on that so you'll know that I'm not fabricating this. Those today that work, work, work, and save, save, save their money in accounts like 401Ks and IRAs and other qualified retirement accounts are in for a rude awakening when it comes time to do their retirement. retirement math. I urge you, my friends, do the math. Figure out what you're saving today, what it's going to be worth when you get close to retire. Do the math, my friends. So, if saving money is a losing strategy, what do you do? It's actually very simple, my friends. You need to do only one thing, just one time.

And it's really shift your focus from making piles of cash to creating streams of income. Let me say that again. Stop making piles of cash and start making streams of income. Make that one shift one time and support it with a correlated action. and these new rules of money will work in your favor. Let me explain this a little bit further, because I know it sounds a little wishy-washy, and I'm not just saying this to be the motivational speaker.

By the way, I'm not a motivational speaker. I just speak from experience. But when I stopped doing fix and flips from making that big chunk of money, to making that big chunk of money, work for me. It changed everything for me. It's rather ironic that we are all taught to save a giant pile of cash when really creating streams of cash should be the end goal. I mean, we are all taught to go to school, get good grades, get into an awesome college, get a great job, then work, work, Wharf and save, save, save, live below your means and clip coupons.

Don't buy Starbucks on a daily basis. Buy use cars and, you know, limit your personal splurges. Because, of course, they all add up, you know. We're basically told to wait to live our lives until our pile of money is so high that it could then spin off a residual income, a stream of cash, of which will allow you to live later right around the age of 65 or 68 and a half. Once the best years of your life and the most active years of your life are behind you, they encourage you to start living at the age of 65 since you saved that pile of money. That's what you've been taught. That's what we've all been

taught. That's what we've been told. And 99% of the population is failing with this approach. So let's try a different approach. Rather than focusing on the piles of cash to create streams of income, let's flip that equation around and focus on streams of cash to create the piles of cash. And what you get is the same result, but better, meaning you can still get the same results while you get to live your life. But you get to do that now. After all, you're living now. And when is life happening now, my friends, right now.

Now, here, for the Department of Health and Human Services, when it comes to today's 65-year-olds, 54%, more than half of the 65-year-olds, 54% of them are dependent on either family or their church or some kind of government subsidized program. 36 of these, 36% of these are still working. I mean, and they're working at jobs where they say, may I take your order, please, or welcome to Walmart, because that is the only job that they are able to get at the age of 65. 5% of these 65-year-olds are no longer with us. They've diseased.

and 4% actually do manage to achieve that status of financial independence. But wait, don't get too excited. Because per the government's definition of financial independence, all this means is your investment spins off a minimum of $36,000 a year. There aren't too many places left where $36,000 a year translates to independence. The last piece of this pile belongs to that 1%. Only 1% of our 65-year-olds that are considered wealthy have a net worth of more than $5 million. But the point I want to make here is to show you that 99% of our society is failing financially.

And the reason why they're doing that, they're failing financially, is because they're playing by the old rules of money. So now you know the difference between active income and income. passive income. You now know that although passive income is not entirely passive, it's still better than active income. You now know the new rules of money as well, really important. And you now know if financial freedom is to ever be yours, you have little options other than to create passive income for yourself. You've seen that those that don't end up financially dependent. But again, enough about them. I'm really concerned about you, my friends. If you've had passive incomes working for you right now, what kind of impact would that have for you? If you think about this all the time and you

think about pursuing piles of cash instead of streams of income. How much is it costing you right now? What is it costing you? Time away from your family because you have to work overtime? Time away from your family because you have to do trips that require you lots of time on an airplane? Right now, you have a decision to make. And it's my job during our time together here on our show to help you make a great decision. And the first decision is, are you going to continue to focus on building piles of money?

Or are you going to focus on creating streams of money? Are you going to keep playing by the old rules or the new rules? The old way or the new way? It's a new way, right? It's a no-brainer. After all, when Matt and I shifted our mindset from piles of cash to creating streams of income, everything changed for us. And for now, all I'm talking about is for you to get your mind wrapped around shifting your focus. Life isn't going to change overnight, my friends, but your mindset can. It'll get you to specifically where you want to go. But what I'd like for you to consider right now at this very moment, work full time on your

active income and part time on your passive income. If you just did that, it won't be long before the. the two are reversed. I promise you. I started that way. And if I did it, if Matt and I did it, you can do it too. That's how you will escape the rat race. Now, what did you notice? What did you learn from what I just shared? And what would you like to share? I think the big takeaway here is if financial freedom, financial independence, a life of options, like escaping the rat race, whatever it is for you, whatever name you choose to call it, if you aspire to having more free time to do what's most important to you in your life, you don't have a chance unless you create passive income for yourself. And the more you create for yourself and your family, the more free time you'll have. Passive income is only the road to financial freedom, my friends.

Now, the vehicle you choose to travel that road is an entirely different conversation. You do have options. You have lots of options. There's more than one way to skin the passive income cat, so to speak. And we'll discuss those options on the next episode of Turnkey Tuesdays. And we will resume the frustrated investors guide to passive income to help you escape the rat race and create financial freedom in your worlds. I'm here to help you escape the rat race. Ladies and gentlemen, my name is Mercedes-Torres. I am lucky enough. to be your partner in Prime 2. So feel free to reach out to me.

Go to our website, cashflow savvy.com. That's savvy with 2Bs. Download the frustrated investors guide to passive income where the step-by-step escape-the-rat race plan is downloadable for you to see.

And I will catch you on the next episode of Turnkey Tuesdays. Your portfolio has seen better days. But this two shall pass. And the best for you is yet to come. Together, we'll get you there faster. We're cash flow savvy.

And we'd like to share some information with you that will show you how you can take control of your financial future and accelerate its arrival. Go to cashflowsavvy.com. More building, less waiting. Cashflow savvy.com. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.