Epic Real Estate Investing - Transactional or Residual Income | 950

Episode Date: March 7, 2020

Transactional or residual income? Most people will say residual even though they pursue transactional income. Therefore, Matt reveals a formula to shift from transactional to residual income and reach financial freedom! Tune in and find out more! Learn more about your ad choices. Visit megaphone.fm/adchoices

transactional or residual income. Which one do you want more of? Most people will say residual, but the irony is most pursue transactional. So today I'm going to show you how to make that shift so that your actions match your desires. This is Terrio Media. Success in real estate has nothing to do with shiny objects.

It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit r-e-I-Ase.com. Here's Matt. Hello, and welcome to the epic real estate investing show,

where we show people how to invest in real estate with an emphasis on retiring sooner. That's what we do here. That's what we talk about. And right now I'm actually on a layover. I'm stuck in the San Francisco airport. I had a flight delay. And I'm here for seven hours. And I won't be anywhere in time to record this for you. So we're going to do it here. So if you hear any background noise or announcements, then you'll know what that's all about. All righty. So I was thinking about this transactional residual income. And, you know, according to a survey by a financial firm alliance. 60% of us fear running out of money in retirement more than we fear death itself. I mean, all we want, what we want most in life is just to outlast our money. That's what we're

focused on. And it's ironic that we all want it so badly. We all want financial freedom so badly. And we know how it's going to happen for us. It's either going to be through a giant mountain of money or an endless stream of it. That's what's going to get us there. And we want it so badly that we just don't have it. So few people ever actually get it. And most people, sadly, for the stats, never even get close. So let's go into the difference between the two,

transactional income and residual income. And then you can decide which one aligns with your goals. and then what actions you can take to get it. In the same way that epic investors like Corey Kindig and Parker Stiles, Tony Jardieu, happens to be his birthday today as I'm recording this. So happy birthday, Tony. Mackenzie Kelly, Catalina Perez, Brad Donnelly, Daniel Ackerman, Jack and Josh, Mark and Bryce. I mean, there's so many of them, all of these epic investors.

I've had the same conversation with, and I've walked them through the exact same process that I'm going to share with you. And now, if you choose, you'll be able to follow in their footsteps. All right? So transactional income, it's just that. It's income that comes to you from a single transaction. It's just a payment that comes, a single payment that comes to you from a single transaction. Like from flipping a house or flipping a contract. and I'll say wholesaling, just so y'all know that qualifies as well.

I just want you to know that I'm removing that term from my vocabulary. I'll still probably have to use it just for efficient communication. But I'm going to remove that from my vocabulary. And you probably should too. By calling yourself a wholesaler, everyone is really starting to attract a whole lot of unwanted attention to you, particularly from one of the biggest lobby groups in the whole country, the realtor. Association and they're trying to make it more and more difficult for you. And the reason they're doing that is because everybody's showing off and calling themselves wholesalers and making money

and the National Association of Realtors feel like you're stealing money from realtors. So they're trying to make it difficult for you. They're trying to pass laws and some of the states are getting really good at it. I think Illinois probably has the strongest language I've seen to date. Still not illegal, but they're certainly trying to make it tough and make you believe that it is. So just keep that in mind. Don't call yourself a wholesaler. Just call yourself, I'm a deal finder. I find good deals.

That's what I do. That should be your investor identity. Not wholesaler, not subject to, not lease option, not commercial buildings, not the, you know, storage facilities. Just call yourself. I'm a good deal finder. If you become a good deal finder, then you can just write your own checks. Okay. All right.

So back to this. Residual income, transactional income. We're talking about transactional income first. So the pro of transactional income is, it's typically a decent chunk of cash that you get. And it's nice to get those big chunks of money, right? So that's a good thing. The problem is, once you've got it,

you have to go out and do another transaction to get it to happen again for you. So if you want to be financially free, this is a very long road pursuing transactional income exclusively. And that's obvious, right? it's totally obvious and some of you're like, well, yeah, but I'm not. Well, it can be intentionally or unintentionally. If that's what you're doing most of the time, this is going to be a really long road for you.

If you have every intention to start buying and holding, but it's been a while and you haven't gotten there yet or you're not doing as much as you'd like, just know that the more transactional income that you process that you execute on, the longer the road that's going to be to your financial freedom. All right? pretty much it's the same result as having a job. And we know where jobs are getting people these days. All right. So that's transactional income. Residual income.

So it is just that. It's the residual income from a single transaction, like a buy-in-hold, like buying an income property, or doing a lease option, or selling a house via seller financing and carrying the note. Those all create residual income. So it's a single transaction that creates money repeatedly over time. And the pro here is, if managed correctly, that income can last forever indefinitely.

The con is, it's typically small amounts of money that you're going to receive. But if you want to be financially free, this is the one you must pursue. And the harder and faster that you pursue residual income, the quicker you will become financially free. But here's the problem. The big chunks of money from transactional income, those are fun. They feel good. Do you feel prosperous? You feel like you've accomplished something.

And the small stream of money from residual income, that's boring, right? Nobody wants to do the boring stuff. It's small, $250, $300, $300, maybe $500,000 on a good house. And maybe if you even own it free and clear, you get $800,000 a month. But that's boring. And so a lot of times people will just continue to do the residual or excuse me the transactional income because it feels good. And the residual income doesn't feel so good. It's kind of boring and it's not fun.

So people choose fun what they want right now over boring what they want most for their future. Right. They choose the transactional income because it satisfies what they want right now over the boring residual income. that will produce what they actually want for their life. So if you want to be financially free, you've got to do more of the boring stuff in real estate and less of the fun stuff. So if you take that on and just kind of push aside

for just a moment, that immediate gratification muscle that you got or that need that you've got, it won't be long before life becomes real fun because you end up with the option of not having to flip another house. house if you don't want to or take another seller appointment or launch another direct mail campaign if you don't want. So here's the plan. Here's how you make this happen and kind of get the best of both worlds.

Here's how you get out of your own way. And what I'm about to tell you, actually, it reminds me a couple years ago I was in Austin, in an Austin hotel, surprise, an Austin hotel bar, was there with Mercedes for her birthday. We just took a little weekend getaway. And we were enjoying a quiet drink together in this bar. And I hear from across the room my name screamed. I hear Matt. And I look up. I don't see anybody right away. And I hear my name again. And I finally zero in on the person that's screaming my name. And I don't recognize this person. I don't recognize the person that's screaming my name across the room. But they start to walk over. And I'm like, uh-oh, what does this

mean? What's going to happen? And the person introduces himself as a fan of the podcast and an Epic Pro Academy member. And just kind of shared with me his story in real estate and how much that the show had helped and how much the academy had helped. And his name, you may know him, his name is David Dodge. And really cool dude. And we talked for a little while. He bought us a drink, so it made me like him even more.

But he's become a very accomplished real estate investor in his own right. And he is now a coach that I just discovered. And he has his own podcast and he's become a very good podcaster. And you can follow him on Instagram at David Allen Dodge, if you'd like. And anyway, what made me think of him was that he posted on Instagram this formula for how to manage both transactional income and residual income to set yourself financially free. I think the post was how to create passive income. And it was really just a really cool way of explaining it.

And I just love it when people break things down to the simple. I'm totally attracted to that. And then I do a lot of that myself. and when I see other people do it, I just like quickly identify. It just resonates with me. And I'm just like, that's cool. So I'll share it with you. And I'm going to continue to share this.

I'm actually going to borrow this for a little while. And I'll continue to give David the credit the next few times. But eventually I'm going to take ownership of it. So thank you, David, if you're listening. And by the way, when you can, check out David's podcast at Discount Property Investor, the Discount Property Investor podcast. All right. So his formula goes like this.

You want to use your nine to five. to fuel your side hustle, use your side hustle to fuel your investments, and then use your investments to replace your nine to five. I thought that was really cool way of explaining it in just three little sentences, how to go from nine to five to five to financially free. Use your nine to five to use your side hustle, use your side hustle to fuel your investments, and use your investments to replace your nine to five. So if we broke that down more specifically into real estate as it pertains to transactional and residual income, it looks something like this. You'd use your nine to five to pay your bills to support yourself, right?

And also to support your side hustle. You use your nine to five to pay your bills and support your side hustle being something like flipping houses or flipping contracts, making that transactional income. Now, you've got to resist spending that money you're making from the flipping. You have to discipline yourself to live off of your nine to five. income and save that transactional income. And you're saving that transactional income to buy income property. You're going to buy income property to create the residual income for yourself.

And that's the process. You hold on your 9 to 5. Let your side hustle create that transactional income, the extra transactional income. Put that on the side. Save it enough. And every time you've got enough for a down payment, then you go and you buy an income property to create the residual income. All right?

So when you do that enough times, your residual income will then become big enough to where it supports your bills now and it supports your livelihood. And then you'll have the option to walk away from your nine to five anytime that you want. And I know some people love their job. Some people like what they do. They wonder what they would do if they didn't have to work. So you don't have to quit your job.

But it is a really nice place to be in life to know that you always have the option to. All righty. So here's what makes this really special. And most people only need to do this a dozen or so times to free themselves from their nine to fives. Right. So, I mean, the median household income in America is about somewhere between $45,000 and $50,000 a year. That's what most people survive on. That's like right in the middle. And you only need to do this, complete this cycle a dozen or so times to accomplish that. And if you completed this cycle, just say, let's say you just did it once a month. you could be free in a year, in one year. But that might be a little ambitious for some of you, especially if you're just starting. You might not be able to start with that type of momentum right away. So if you did it every other month,

if you averaged every other month to complete this cycle, you could be free in just two years. Or let's say you just did it once per quarter. You could be free in just three years. Even if you just did this twice a year, okay? You did it twice a year. You could set yourself financially free in like six years. This process can create the type of residual income for yourself that 95% of the population

fails to do working a job for 40 plus years. You can do it. Just repeat this process twice a year and be done in a fraction of the time of how everybody else is going about it. And no special talents are required, no special resources, no extraordinary intelligence is required, just a little bit of know-how, mixed with a little bit of focus and a little bit of persistence, and you could be golfing on a Tuesday while most people are chained to their desk. This is the process all those that I mentioned earlier followed, and so can you. That's what I mean when I say real estate is the final frontier where the average person has a legitimate shot at creating financial freedom for

themselves. That's how you do it. That's a legitimate shot. That is not fantasy land. That is real. You just got to do it. And if you'd like some help with this, you can go to r-e-i-a-a-a-a-s.com, watch a short video on how this would work. And then we can hop on the phone to brainstorm some ideas on how you can pull this off for yourself. All righty. God loves you. So do I. Signing off from the San Francisco Airport to your success. I'm Matt Terrio. Living the Dream. Huh, yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know home for us, we got the cash flow.

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